Shanghai's Silver Delivery Crackdown: What the New Regulation Says and What It Means

Executive Summary

On February 11, 2026, the Shanghai Futures Exchange (SHFE) issued a notice that effectively prevents speculators from taking physical delivery of silver futures [1][2]. Starting from the last trading day of February 2026, anyone without an approved hedging quota will have their near-delivery month position limits set to zero.

This is a big deal. Here’s why:

• Shanghai’s inventory has collapsed from 3,000+ metric tons in 2021 to just ~318 tons today [6]
• Western markets are under stress — COMEX has only 102 million ounces of registered silver but faces 366 million ounces in March delivery contracts [8]
• This regulation shifts delivery pressure from Shanghai to COMEX

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What the Regulation Actually Says

The February 11 notice states [1]:

“Starting from the last trading day of February 2026, non-futures company members… who have not obtained near-delivery month hedging transaction open interest limits will have their general-month hedging transaction open interest limits… temporarily adjusted to 0 contracts.”

In plain English:

• If you’re not an approved industrial hedger, you can’t take physical delivery
• This applies to the final two months before contract expiration (when delivery actually happens)
• The restriction is described as “temporary” with no end date specified

What it doesn’t say:

• How to get approved for a hedging quota
• When (or if) the restriction will be lifted
• What happens to existing positions
• How this coordinates with Western exchanges

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The Numbers Tell the Story

Metric	Current	Historical
SHFE Silver Inventory	~318 metric tons [6]	3,000+ tons in 2021
COMEX Registered Silver	~102 million ounces [8]	Below 100M for first time in a decade
COMEX March OI	~366 million ounces [8]	4:1 paper-to-physical ratio
January COMEX Withdrawals	49.4M ounces [9]	4x higher than January 2025

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What Happens in Shanghai vs. Western Markets

In Shanghai (Short Term)

The regulation will preserve what’s left for industrial users. With inventory down 88%, SHFE was facing potential exhaustion. Speculators can no longer take delivery—only approved hedgers get that privilege.

Result: Shanghai inventory stabilizes. Prices may moderate as speculative delivery demand dries up.

In Western Markets (Short Term)

This is where things get interesting. Speculators who would have taken delivery in Shanghai will now look to COMEX instead.

Result: COMEX faces even more delivery pressure on top of an already stressed system. At current withdrawal rates (49.4M oz in January alone), COMEX inventories could fall dramatically.

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Why This Matters for Prices

1. COMEX physical pressure increases: More delivery demand at COMEX could reduce paper price suppression by forcing the market to reckon with physical scarcity

2. Inventory velocity accelerates: COMEX is already losing 4-5x historical average amounts per month [9]. The regulation adds more demand.

3. Self-reinforcing cycle: Higher prices → more people want physical → inventories deplete faster → even higher prices

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What Will People Do Differently?

Speculators will:

• Roll positions forward instead of taking delivery
• Shift trading to COMEX where delivery is still available
• Move into ETFs, mining stocks, or OTC products

Industrial users in China will:

• Have more secure access to physical (if approved for hedging quotas)
• Face higher costs if they can’t qualify
• Potentially seek alternative supply sources

Western market participants will:

• More people stand for delivery at COMEX
• Vault operators may increase inventory buffers
• Arbitrage between SHFE and COMEX becomes more volatile

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Key Takeaways

1. Shanghai just admitted it has a physical supply problem — restricting delivery is an acknowledgment that the market can’t allocate scarcity through price alone

2. The pressure doesn’t disappear — it relocates — from Shanghai to COMEX, where inventory is already critically low

3. This accelerates the bifurcation of global silver markets — Eastern and Western markets are increasingly operating under different rules with different price dynamics

4. Physical silver becomes more valuable — when exchanges restrict delivery access, it signals that physical has become a strategic resource

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Conclusion

The SHFE regulation marks a watershed moment. By restricting who can take delivery, Shanghai has effectively acknowledged that physical supply cannot meet demand through normal market mechanisms.

The immediate effect: speculative delivery pressure shifts from East to West. COMEX — already stretched with 102M oz against 366M oz in delivery contracts — will bear the burden of demand that would have gone to Shanghai.

For investors, the implication is clear: physical silver exposure offers structural support that paper futures can no longer guarantee. The era of seamless global arbitrage is ending. Regional markets are diverging, and delivery access is becoming a privilege rather than a right.

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Sources:

1. Shanghai Metals Market (SMM), “Shanghai Futures Exchange Adjusts Silver Futures Hedging Limits for Non-Members from Feb 2026” – https://news.metal.com/newscontent/103767163-Shanghai-Futures-Exchange-Adjusts-Silver-Futures-Hedging-Limits-for-Non-Members-from-Feb-2026

2. Newsquawk, “SHFE is adjusting the automatic conversion standard for hedging position limits in silver futures” – https://newsquawk.com/headlines/shfe-is-adjusting-the-automatic-conversion-standard-for-hedging-position-limits-in-silver-futures-11-02-2026

3. Shanghai Futures Exchange, “Silver Futures Rules of the Shanghai Futures Exchange” – https://www.shfe.com.cn/eng/services/Rules/SHFERules/202512/t20251231_829993.html

4. Silver Institute, “World Silver Survey 2024” – https://www.silverinstitute.org/

5. Shanghai Futures Exchange, “Hedging Transaction Management Measures” – https://www.shfe.com.cn/eng/services/Rules/SHFERules/

6. Robert Kiyosaki, Facebook Post – https://www.facebook.com/RobertKiyosaki/posts/china-just-restricted-silver-deliveries-heres-what-serious-investors-should-be-w/1446979780126898/

7. 24/7 Wall St, “Wait and See, This Great Silver Selloff Is Temporary” – https://247wallst.com/investing/2026/02/12/wait-and-see-the-great-silver-selloff-is-temporary/

8. CoinWeek, “COMEX Silver Inventories Fall Below 100M Ounces” – https://coinweek.com/comex-silver-inventories-fall-below-100-million-ounces-as-physical-demand-tightens-global-market/

9. Investing.com, “Silver: The Comex Won’t Default but China Is Ready To Pounce” – https://www.investing.com/analysis/silver-the-comex-wont-default-but-china-is-ready-to-pounce-200674676

10. Caixin Global, “Precious metal volatility puts the ‘safe haven’ trade on trial” – https://www.thinkchina.sg/economy/precious-metal-volatility-puts-safe-haven-trade-trial