Last week, favorable tariffs stimulated prices to soar across the board. After a brief rebound, the spot price of organic silicon has re differentiated, with top brands accepting orders at a premium. The future market may be stable with slight adjustments. This week, boosted by the news of a 90 day easing of tariffs between China and the United States, the trading sentiment in the silicone market has rebounded, with transaction prices rebounding by 50-100 yuan/ton across the board. Driven by short-term positive factors, downstream stocking enthusiasm has increased, and DMC and raw rubber prices have stopped falling and stabilized. Some companies have tentatively raised their prices, with DMC prices in Zhejiang, Hubei and other places increasing by 200 yuan/ton, and the mainstream price range of 11300-12700 yuan/ton (as of May 17). Raw rubber and high-temperature rubber prices have also risen synchronously, and downstream expectations for the future have strengthened. The demand for periodic replenishment has been released, and low-priced goods transactions are active. However, the recovery of terminal demand is weak, and the market's acceptance of high prices is limited. Coupled with cautious volume control by individual factories, the market presents a trend of "short long short" differentiation.
Industry experts have stated that the weak prices of DMC and other organic silicon contracts since April are due to an imbalance between supply and demand. Currently, the organic silicon market is in a stage where demand needs to be restored and social inventory needs to be depleted. Mr. Liu, a major downstream investor, also believes that the current fundamentals of organic silicon are relatively weak. With the downward shift of integrated production costs and the decrease in prices of imported raw materials, the cost support of individual enterprises is gradually weakening. Although the easing of tariff disturbances has brought certain macro benefits, there is still a lack of substantial support in the short term, coupled with recent negative news disturbances, the price boost is limited. The continuous bottoming out of the price center of organosilicon is seen as a signal that the industry is accelerating its clearance.
Market forecast: Mr. Liu believes that the transaction price of chemical grade 421 # metal silicon on the raw material side will continue to decline, approaching 11000 yuan/ton, which will further weaken cost support. Under the expectation of weakened demand and increased supply in the later stage, it is expected that the social inventory of organosilicon will continue to accumulate, putting pressure on prices. The market needs to pay attention to the production reduction and shutdown situation of the top three major companies, such as signals of production reduction by the top three companies and control of shipment pace by the companies. In the short term, the market may maintain stability with a slight increase, but due to terminal demand and industry competition, the rebound space is limited. It is recommended to pay attention to the downstream operating rate and changes in export policies in June. If there is no sustained positive news, prices may enter a narrow range of fluctuations.   
What is China's dominant position and transformation challenges in the global silicone market? Industry insiders believe that market patterns and supply-demand contradictions: As the world's largest producer and consumer of organosilicon, China accounts for over 60% of global production capacity. However, the rapid expansion of production capacity has led to a temporary supply-demand imbalance in the industry. In 2023, domestic single unit production capacity increased by 18% year-on-year, while apparent consumption only increased by 5%, highlighting the supply-demand contradiction. This structural surplus has caused DMC prices to fall by over 70% from their 2021 peak, resulting in a continuous compression of industry profit margins.
Structural differences in imports and exports: Customs data shows that in 2023, the average price of imported high-end silicone products will reach 2.3 times that of exported products, with the import dependence on high-end products such as medical grade silicone and electronic packaging materials still exceeding 65%. On the other hand, in the export market, although the export volume maintains an average annual growth rate of 13%, homogeneous competition has led to a continuous decline in export prices for three years, and the proportion of processing trade has risen to 67%, reflecting that the value chain positioning still needs to be improved.
Application field kinetic energy conversion: 1. Traditional field: The demand for building silicone sealant decreased by 18% year-on-year, and its proportion in the consumption structure fell below 40% for the first time. 2. Emerging fields: The demand for organic silicon materials for photovoltaics has surged by 62%, with monthly usage exceeding 50000 tons; The consumption of new energy vehicles has increased by 45%, and battery pack packaging materials have become a new highlight; The import substitution of medical grade organosilicon is accelerating, and the localization rate has increased to 28%. 3. Innovative application: The penetration rate of silicone leather in the automotive interior field has reached 15%, and the annual demand for silicone for AI toys has exceeded 80000 tons.
Industry outlook and development path in 2025: 1. Market cycle: It is expected that DMC prices will remain in the range of 11000+-13000+yuan/ton, and the industry reshuffle will accelerate. The capacity clearance rate of small and medium-sized enterprises may reach 25%. 2. Breakthrough direction: Technological breakthrough: Breakthrough in electronic grade organic silicon (purity ≥ 99.99%) and medical implant grade material certification. Global layout: Build 3-5 downstream product factories in Southeast Asia to avoid trade barriers. Digital transformation: Building smart factories to reduce energy consumption by 20% and increase production efficiency by 30%. Sustainable development: Developing bio based silane technology to reduce carbon emissions by 30%. The next three years will be a critical period for the industry to transition from scale expansion to quality improvement. The R&D investment intensity of top enterprises has increased to 4.5%, and the industry will present a new development paradigm of "high-end breakthroughs, low-carbon transformation, and global operation".