A game of "no chivalry": The frenzy of "short squeeze" in commodities

01 When Gold is Held Down, Silver Begins to "Speak"

When gold is "managed," silver takes over the "microphone." However, if it is only short-term news stimulation, the market won't go that far. I believe the deeper logic lies in the subtle changes in the connotation of the gold-silver ratio trading this year.

In the past, a declining gold-silver ratio (silver rising faster than gold) usually simply meant that the market was more optimistic and "risk on." But this year, there are two new layers of meaning:

Gold has "put on the reins": Have you noticed? Both domestically and internationally, there are occasional management actions regarding gold, which has a strong "political attribute." For example, at the end of last month, a policy was issued domestically to tighten the value-added tax deduction for private gold. This is like setting some "roadblocks" for gold's short-term liquidity. In contrast, the market players in silver are more "market-oriented" with less regulation. Therefore, when gold wants to express but "cannot" fully express macro logic (such as concerns about currency credit and bets on inflation), silver, the more free-spirited brother, begins to "take over" and amplify.

Spot really has become "tight": This round of silver bull market has created a self-reinforcing cycle: price increase → attracting a large amount of investment buying to lock in physical inventory → the liquidity of spot on the market is drained. A clear sign is that global silver inventories are "moving." Due to concerns that the U.S. may impose tariffs in the future, a lot of silver has been preemptively transported to U.S. warehouses, leading to shortages in London, where there was even a "warehouse squeeze" in September (spot shortages causing spot prices to be much higher than futures). This tension has spread, and by the end of the year, even our domestic futures market saw "backwardation" (near-month contracts being more expensive than far-month contracts), which is a typical signal of tight spot. The tightness at the physical level provides a very solid reason for financial speculation.

Looking ahead: History and endpoints Based on historical experience, such a silver bull market driven by the "gold-silver ratio" often lasts about a year. Currently, this round of market movement is still in progress since mid-year.

So where might the endpoint be? Personally, I think the gold-silver ratio may head towards 50 or even lower. If we take this as a target to calculate backwards, there is indeed considerable room for silver prices relative to current gold prices. Of course, this path won't be straight; there will definitely be fluctuations and oscillations in between, especially if market expectations for Federal Reserve rate cuts encounter twists or if global risk sentiment suddenly turns.

02 Polysilicon's Big Transformation: From "Warehouse Squeeze War" to "Value Return"

First Half: A Squeeze Game About "Warehouse Receipts"

To understand the current decline, one must first know why it rose before.

Since the end of November, polysilicon futures have been performing strongly, with the core reason being four words: insufficient warehouse receipts.

What are warehouse receipts? Simply put, they are spot goods that meet standards, registered in exchange warehouses, and can be used for delivery. On November 28, after a batch of old warehouse receipts was concentrated and canceled, only 1,330 contracts (about 3,990 tons) of available warehouse receipts remained in the market. This quantity is very small compared to the positions in the futures market. Scarcity is valuable. Thus, a classic "squeeze market" unfolded The bulls think: "With so few warehouse receipts, what will the bears use to deliver to me?" Under this expectation, the bulls hold absolute initiative, continuously pushing prices higher, resulting in a significant premium of futures over spot.

It's like at an auction where only the last treasure remains; everyone competes to bid, and the price can easily be driven far beyond its actual value.

Second Half: Reality Begins to "Restock," Game Rules Change

However, the market does not have a forever one-sided trend. As December arrives, the situation begins to change.

Change One: Warehouse receipts really start to increase. Just last week, newly registered warehouse receipts increased by 990 contracts (2,970 tons). Especially on last Friday (December 5), the daily registration volume was substantial. This means that the available "spot bullets" for delivery have increased, and the bulls' confidence in "forcing the bears" is not as strong.

Change Two: The number of "brands" available for delivery has increased. Also on last Friday, the exchange issued a key announcement: two new brands of polysilicon can be used as futures delivery items. This is equivalent to "opening up more suppliers." In the future, the bears will have more options and lower difficulty in organizing sources and creating warehouse receipts.

These two changes together send a clear signal: the previous logic of "tight warehouse receipts" supporting price increases is beginning to collapse. The market's trading focus will inevitably shift from "capital games" back to "spot fundamentals."

03 Glass: Waiting for a Reason for a "Rebound"

Recently, looking at the glass market feels like watching a somewhat dragged-out drama— you know the protagonist (the price) is in a difficult situation, and you see some signs of turning (like production line maintenance), but no matter how long you wait, you can't seem to find that exhilarating "reversal" plot. Today, let's talk about why the glass market is so "flat" and unable to rise.

1. Core Dilemma: Reducing Production While Demand "Lies Flat"

The root of the problem can be summed up in one sentence: although the supply side has already been "slimming down," it can't withstand the demand side lying even flatter. This "you reduce yours, I weaken mine" situation makes all attempts at a rebound feel like a punch hitting cotton.

From the data, the daily melting volume of glass has dropped from over 160,000 tons in early November to around 155,000 tons now. This is mainly due to some production lines in places like Shahe undergoing "cold repairs" (temporary shutdowns for maintenance). Statistically, supply has decreased, and the short-term supply-demand conflict has indeed eased a bit. But the key is that this reduction is far from enough to pull the market out of the "oversupply" quagmire.

What’s even more troubling is the demand side. Macroscopically, expectations for real estate remain pessimistic, and there is currently no strong stimulus at the policy level. This means that terminal demand for glass shows no fundamental improvement hope in the short term. Therefore, even though factories are trying to reduce production, the "ballast stone" of market confidence is too light, and the price's small boat still sways heavily.

2. Market Reality: Futures and Spot "Duo Performance," Rebound Always Lacks Strength If we review the recent price trends, we can feel this sense of powerlessness.

In November, I noticed that if there hadn't been a rebound caused by a short-term supply-demand mismatch at that time, prices would likely have remained in a low-level fluctuation. Now it seems that the timing for this "mismatch" indeed hasn't arrived. Although inventory decreased relatively quickly last week, a closer look reveals that it was mainly midstream traders receiving goods, while the actual downstream processing plants and construction sites were not actively procuring, and demand has not truly picked up.

Take the recent 2601 contract as an example; it fell to a low of 970 yuan/ton at the end of November. When it was falling, spot prices followed suit, and no one seemed confident enough to "support the price." Later, due to the prices being too low and market rumors starting to circulate about more production lines undergoing maintenance, the futures market saw a rebound. However, the awkward part is that the spot market did not keep up at all, and the price increase could not be transmitted downwards. The result was that futures rebounded for a while, but without support from the spot market, they gradually fell back, and now they are back around 980 yuan/ton.

This price is similar to the delivery prices of recent months. It can be said that the market has neither experienced a panic sell-off nor shown any momentum for upward breakthroughs. Currently, futures prices are slightly lower than the static spot prices, in a state of "contango," and even the 2512 contract has still seen a significant drop without much warehouse receipt pressure, indicating that overall market sentiment remains weak, and prices may be slightly undervalued.

04 What Are We Talking About When We Discuss a "Commodity Bull Market"?

Why gold, silver, and copper? What makes them the stars that can transcend cycles?

If we were to draw a "heroic portrait" of gold, silver, and copper, we would find that they share two core characteristics: "rigid supply" and "elastic demand."

The rigidity of supply forms the "foundation" and "moat" of prices.

The growth of gold and silver mineral supply is extremely slow, exploration costs are high, and the net buying behavior of global central banks for decades has evolved from simple asset allocation to a deep "de-dollarization" strategic reserve, permanently withdrawing a portion of physical assets from circulation. Copper mines face a more immediate dilemma: the grade of major global mines is irreversibly declining, new mine projects take at least ten years from discovery to production, and they face increasingly stringent ESG scrutiny and high capital expenditure thresholds. Their supply curves are steep and lack elasticity.

The elasticity of demand gives prices the "wings" to soar.

The financial attributes of gold and its safe-haven demand continue to ferment amid macro uncertainty; silver benefits from massive consumption in the photovoltaic industry; as for copper, its story is the most compelling—it is not only the ancient "king of industrial metals" but also the new "king of the electrification era." The epic upgrade and transformation of global power grids, the increasing penetration of electric vehicles, and the exponential growth in electricity consumption of AI data centers... each narrative points to a huge incremental demand for copper cables, copper foils, and copper pipes. The "fragility" of supply meets the "vast sea of stars" in demand, igniting the spark of prices However, this captivating narrative framework cannot be applied to most commodities.

If we calmly step out of the "star lounge" of gold, silver, and copper and take a look at the "backstage" of other commodities, we will find a completely different scene:

If you ask crude oil, "Can you rise like copper?" it would smile wryly: once oil prices rise significantly, discussions about idle production capacity in the OPEC+ meeting room will heat up, and the number of drilling rigs operated by U.S. shale oil companies may quickly adjust downwards; the supply response mechanism remains effective. The premium brought by geopolitical factors will always be suppressed by new supply increments.

If you ask rebar, "What about your demand story?" it can only remain silent. Its lifeline is still deeply tied to the pulse of real estate and traditional infrastructure. When the main demand engine is still operating at low speed, any rebound in prices may encounter the embarrassment of "high prices with no market," which in turn will suppress already weak demand.

If you ask chemical products, "What is your industry landscape like?" you will hear a sigh of "involution." Just look at the net loss figures in the latest financial report from global chemical giant Dow Chemical, and you will understand that against the backdrop of global overcapacity and weak downstream consumption, the cost transmission mechanism has failed, and the industry is caught in a brutal battle for existing market share.

Thus, I have gradually formed the view that the current market's enthusiastic discussion of a "commodity bull market" is largely "hijacked" by the brilliance of the three superstars: gold, silver, and copper. What we see is a "localized bull market" driven by specific structural factors, which not only cannot represent the overall situation but also reflects the cold reality of many other commodities being in a "localized bear market."

The clamor of the former easily overshadows the desolation of the latter. This is more like a reflection of an "asset shortage" in the commodity sector under the macro environment—capital is frantically flowing into a few targets with the hardest narratives and the longest logic amidst uncertainty.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at one's own risk