In week 21 (May 19 – 23) Chinese wholesale gold demand, measured by SGE withdrawals, was 36.4 metric tonnes, up 22.98 % from the week before. This is the highest weekly demand since week 9 (February 24 -28). 36.4 tonnes is just shy of the year to date weekly average of 37.5 tonnes. Chinese gold demand has been down in recent weeks from extremely strong in the first 9 weeks of 2014 to less strong in the last 12 weeks.
The insight SGE withdrawals give us has again been confirmed by the latest trade data from Hong Kong and Switzerland. Net export of both counties to China mainland in April was down from the previous month. Hong Kong net exported 65.4 tonnes to the mainland in April, down from 85.1 tonnes in March, Switzerland net exported 12 tonnes to the mainland in April, down from 26 tonnes in March. These numbers were expected as they match SGE monthly withdrawal numbers. SGE withdrawals in April were 130 tonnes, down from 147 tonnes in March.
In April the mainland was supplied by 77.4 tonnes from Hong Kong and Switzerland, 33 tonnes came from domestic mining and an additional 19.6 tonnes of supply came from scrap and/or import from other countries. Note, there can be gold en route from being imported till its sold on the SGE and not all gold supplied to the SGE will be withdrawn from the vaults, some members/individuals hold it in their SGE account.
Silver withdrawals are unfortunately not published by the SGE, though it wouldn’t be that interesting as gold withdrawals. The Chinese silver market is not constructed as the gold market, hence silver withdrawals wouldn’t inform us about Chinese total silver demand. However, in week 21, we can see that the premium of spot silver on the SGE was still trading at more than 5 % above the international price, measured by the Ag(T+D) contract.
On the Shanghai Futures Exchange most silver contracts were trading in backwardation on May 30. This is the curve:
Overview Shanghai Gold Exchange data 2014 week 21
– 36.4 metric tonnes withdrawn in week 21 (19-5-2014/23-5-2014)
– w/w + 22.98 %
– 787 metric tonnes withdrawn year to date.
My research indicates that SGE withdrawals equal Chinese wholesale gold demand. For more information read this.
This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.
This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).
Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.
In Gold We Trust
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