In the new week, under the "China US negotiations", the trade exchanges between the two sides seem to have reached a significant turning point. On May 12th, the joint statement of the China US Geneva Economic and Trade Talks was released, and the two sides reached a mutual tariff reduction agreement. The United States agreed to reduce tariffs on Chinese goods from 145% to 30%, while China will reduce tariffs on American goods from 125% to 10%. This news has injected a shot in the arm into the silicone market, especially as downstream terminals have increased confidence in the future. It is expected that related downstream companies will launch purchasing actions in the next two days, which will help stabilize transaction prices. If orders form a positive feedback, with the current historical low, or trigger some downstream bottom buying sentiment, individual factories will also take advantage of the situation to raise prices as orders improve. According to our understanding, some individual factories' product lines were closed last night, and it is expected that with the boost of short-term confidence, it may stimulate a bottoming out rebound market.
On the cost side: Currently, major factories in Xinjiang have added new production cuts, but there has been a significant increase in production in the southwest and Sichuan regions, mainly for supporting polysilicon enterprises. The overall supply side reduction is limited. On the demand side, the production of polycrystalline silicon in May has been reduced, and the demand for industrial silicon is limited due to the decrease in load of organic silicon monomer plants. Overall, the inventory pressure of industrial silicon enterprises has been difficult to alleviate, and it is far from reaching the clearing stage. There are also varying degrees of production cuts downstream, which has led to a continuous weakening of spot prices. Yesterday, the closing price of the main futures contract Si2505 was 8320 yuan/ton, and the spot price of 421 # metallic silicon continued to decline to 9400-12250 yuan/ton, providing moderate support for DMC. In terms of operating rate: In the event that terminal demand falls short of expectations, each individual plant is carrying out maintenance plans in an orderly manner to balance supply and demand and reduce losses. Currently, the Northwest and Central China regions are maintaining low load rates below the expected level, while individual plant installations in other regions are also reducing production to varying degrees. The overall operating rate is 58.21%. However, with the easing of the tariff war, orders may show a rapid recovery trend, and the operating rate may gradually increase.