On Thursday, the organic silicon market continued to consolidate at a low level, with mainstream DMC prices ranging from 11400 to 12700 yuan/ton. The market presents the following characteristics: 1 There is a new trend in the supply-demand game: large factories in Northwest China have started a 20 day maintenance, while enterprises in North China plan to shut down the entire line for 15 days on June 3. After the June holiday, there are still multiple enterprises planning maintenance, and the industry's operating rate will gradually decrease. Terminal enterprises have started to replenish inventory in batches, and although most still maintain essential procurement, transaction activity has increased by 15-20% compared to last week. 2. Market support factors have emerged: the price of raw material silicon metal has begun to stabilize, the cost lines of individual factories have differentiated, and some enterprises have reached the break even point. It is expected that the industry's operating rate will drop to around 63% in June, and the monthly production will decrease by about 70000 tons. Partial demand release: Seasonal replenishment demand has emerged in areas such as photovoltaic modules and electronic adhesives. 3. Price trend prediction: The current market is in the bottom building stage. Although some small and medium-sized individual factories still have a hidden discount promotion of 100-200 yuan/ton, mainstream enterprise quotations tend to stabilize. Considering that the turnover days of social inventory have decreased to 12 days (a decrease of 3 days from the previous month), the maintenance scale in June has expanded by 35% compared to the previous month, and the visibility of downstream orders has extended to 2-3 weeks, it is expected that the DMC price at the end of the month will show a mainstream transaction range of 11500-12500 yuan/ton, a gradual reduction in low-priced sources, and a narrowing of the actual transaction profit margin to 50-100 yuan/ton. Attention should be paid to the actual release progress of new production capacity in June, the recovery of organic silicon export orders, and changes in downstream enterprise raw material stocking cycles.
Analysis of the 107 rubber market: The weak stability trend continued throughout the week, with limited support from the demand side. As of May 29th, the mainstream transaction price of 107 rubber in the domestic market has remained stable at over 13000 yuan/ton, with decent terminal demand performance, but the bargaining space has narrowed. Market transactions are mainly based on essential orders, and the overall trading atmosphere is relatively weak. Weak and stable cost support: Although the price of raw material DMC has stopped falling and stabilized, the market is still dominated by low-priced transactions, which has limited support for the cost of 107 rubber. There is obvious differentiation in the supply side: the current operating rate of individual factories remains at a low level of around 65%, and the 800000 ton plant in the northwest region continues to undergo maintenance. The top individual enterprises mainly focus on stable shipments from core customers. However, due to the weak terminal consumption, new orders have been quiet, and some individual factory holders who lack stable large customers continue to offer discounts. The market presents a differentiated pattern of "orders are king". Outlook for the future: In the short term, there is unlikely to be a significant boost on the cost side, while the demand side has limited incremental growth. It is expected that the 107 rubber market will continue to operate weakly and steadily, and the price fluctuation space will narrow. It is necessary to pay attention to the downstream procurement rhythm and the trend of raw material DMC.
Recently, several industry experts suggested opposing all bottomless commercial industries. The industry must adhere to open and healthy competition, avoid price wars, and engage in value wars, technology wars, quality wars, service wars, brand wars, and corporate ethics wars. In the silicone industry, price wars are actually a common topic. Price wars certainly have short-term benefits for top companies, as they can harvest a large number of orders at lower prices. However, a persistent vicious price war, commonly known as' involution pricing ', can also have many negative impacts. In fact, deflation in economics can also be used as an analogy, causing corporate losses, industry downturn, quality decline, and R&D stagnation, which will ultimately be transmitted downstream. Industry analysis suggests that the significant decline in the overall net profit growth rate of the industry last year indicates that the internal price war that began in early 2023 has begun to erode the profitability of individual factories. If major corporations cannot focus on "value wars" such as quality and research and development, but blindly pursue low-level, reckless price wars, then an industry wide profit crisis is not impossible to occur.