Rise up, rise up! DMC Silicone Oil Major Companies Explore Price Increase! Last week, the price of the organic silicon industry chain showed signs of stabilization, and the market game has entered a critical stage. After months of unilateral decline, the domestic silicone market has shown signs of stabilization recently, and various links in the industry chain are engaging in a new round of price competition. Industry monitoring data shows that the mainstream DMC quotation range last week was 11400-12700 yuan/ton, among which the exploratory price increase of a leading enterprise in Shandong has attracted widespread market attention. However, upon closer observation, it is found that the current market presents a clear "dual sky" pattern: on the one hand, some companies have raised their quotations by 100 yuan/ton to 11400 yuan/ton, and on the other hand, there is still room for a hidden decline of 200-300 yuan/ton in actual transactions with core customers.
From the perspective of supply and demand fundamentals, the market is undergoing three key changes: 1) Improvement in inventory structure: the inventory turnover days of major individual factories have decreased from 28 days in late April to around 21 days currently, especially in the East China region where the inventory turnover rate has significantly accelerated. However, regional differentiation is significant, and some enterprises in the southwest region still face inventory pressure of over 30 days. 2) Weakened cost support: With the price of metal silicon 421 # falling to around 11000 yuan/ton, coupled with the rise in prices of raw materials such as methanol, the production cost line of organic silicon has moved up to the range of 11600-11800 yuan/ton, and most individual enterprises are actually in a slight loss state. 3) Structural differentiation has emerged on the demand side: although traditional fields such as building silicone adhesives are still in the off-season, high-end fields such as electronic potting adhesives and silicone for new energy have seen a 15% -20% month on month increase in orders, providing certain support for high-end silicone products.
The game strategies of market participants have shown significant differentiation: 1) In terms of upstream enterprises, leading enterprises are trying to regulate market supply by controlling operating rates (currently the industry average operating rate is 65%), and some devices have begun planned maintenance. However, small and medium-sized manufacturers still use price reduction as their main strategy to maintain cash flow. 2) The current inventory of midstream distributors and channel partners is generally controlled at 10-15 days of usage, a decrease of 30% compared to the same period in previous years, reflecting a cautious attitude towards intermediate links. 3) End user procurement strategies are becoming more refined, with major clients in core areas such as electronics, healthcare, automotive industry, construction engineering, daily consumer goods, and aerospace adopting a "small order high-frequency" procurement model, compressing single purchase quantities to 5-7 days of usage.
It is worth noting that overseas markets are becoming a new variable. As Southeast Asia enters the traditional procurement season, the export volume of organic silicon in May increased by 12% month on month, with a 25% increase in orders in the Vietnamese market. However, changes in the international trade environment and rising shipping costs still raise doubts about whether the export market can continue to recover. Industry experts point out that the current market is in a critical turning point window period. If the traditional peak demand season in June can start as scheduled, coupled with continued support from the cost side, the price of organic silicon is expected to truly stabilize. However, in the short term, considering that some individual factories still face quarterly assessment pressure, it cannot be ruled out that there will be a new round of hidden price promotions, and the market may maintain a volatile pattern in the range of 11500 ± 300 yuan/ton. It is recommended that downstream enterprises increase their safety stock appropriately, but the total amount should not exceed 50% of the monthly usage to cope with possible price fluctuations.