Falling momentum breaks defense! In the new week, the silicone market is still declining! Yesterday, some individual DMC factories in Shandong opened at 11500 yuan/ton, followed by a second round of bidding. At the same time, some individual factories also actively followed suit, and the DMC transaction price was basically around 11500 yuan/ton. Large quantities can still be negotiated, stimulating downstream to increase stocking efforts. At present, as the end of the month approaches, some downstream companies have engaged in bottom building behavior, and DMC has broken a ten-year low, not only reaching the expected price of downstream, but even continuously breaking through defenses. This week, some companies have started a second round of bottom buying and stocking up. However, the downward trend is too fast, and downstream companies' demand for buying at the bottom is also decreasing in batches. If it falls again, buy again; if it stops falling, buy less; if it rebounds, wait and see. At present, under the influence of weak demand, short-term bottom fishing behavior can only alleviate the current inventory pressure of individual factories. If the operating rate does not further decrease in the future, price pressure will still be significant. Based on the recent bidding atmosphere, it is highly likely that synchronous production cuts will be difficult to achieve, mainly due to cost and inventory constraints. It is expected that the decline in the silicone market this week will be synchronized with bottom fishing.
On the cost side: The electricity price during the southwest flood season has been lowered, and the average production cost has been further reduced. In addition, some previously shut down enterprises have no intention of resuming production. Recently, there have been new news of reduced production and shutdown, and the overall supply level is relatively high but there is no expectation of significant growth. In terms of demand, the futures price of polycrystalline silicon has dropped significantly, and the sentiment in the photovoltaic market is weak. However, the monthly production schedule of polycrystalline silicon has not been significantly adjusted, which stabilizes the demand for industrial silicon; The price of organic silicon continues to fall, and it is expected that individual factories will further adopt a strategy of reducing production and stabilizing prices, which will limit the procurement of industrial silicon. Overall, in the absence of strong demand, the destocking capacity of industrial silicon is average. Under inventory pressure, the fundamentals continue to weaken, and spot prices continue to hit new lows. Yesterday, the closing price of the main futures contract Si2505 was 8860 yuan/ton, and the spot price of 421 # silicon metal fell to 10150-11450 yuan/ton, providing moderate support for DMC. In terms of operating rate: Currently, with poor demand, many regions are maintaining maintenance, and individual factories in Inner Mongolia, Zhejiang, Shandong and other areas are operating at a reduced load. However, from the current market situation, individual factories continue to decline, and the road to profit recovery is tortuous. In order to avoid risks, the scale of production reduction may continue to expand in the future.