Recently, the silicone market has shown a dual trend of ice and fire, with DMC prices stabilizing temporarily and low price competition intensifying; On the other hand, the cost of silicone additive platinum catalyst has risen sharply, posing challenges to the industry.
From the DMC market perspective, the low price war is still ongoing. Shandong DMC quoted 10500 yuan/ton, while other individual factories quoted around 11000 yuan/ton, but the focus of transactions is shifting towards the lower end. In order to stimulate orders, individual factories constantly trade price for quantity. However, downstream enterprises have lost their enthusiasm for stocking due to multiple failed bottom fishing attempts, and the profits of middle and downstream enterprises are meager, resulting in a widespread phenomenon of price pressure inquiries. Affected by this, this week's raw rubber, 107 rubber, and silicone oil all followed the downward trend of DMC, and the price difference gradually narrowed. In the short term, the market seems to be struggling to escape the dilemma of low price competition, and the price of organic silicon continues to hit new historical lows in 10 and 20 years.
In sharp contrast, platinum catalysts, an important additive in the silicone industry, are facing the challenge of rising costs. Its main raw material platinum has been in a pull-out mode since June. On June 13th, spot platinum briefly rose to $1300 per ounce, with a cumulative increase of over 40% since the beginning of the year, reaching a new high in nearly a decade. However, due to the continued sluggish demand in the silicone industry, platinum catalyst manufacturers dare not raise prices rashly, and most choose to self digest the increase, resulting in further pressure on profit margins. But as costs continue to rise, platinum catalyst prices may have to be adjusted upwards in the future.
On the cost side, the expectation for large factories in Xinjiang to start furnaces is gradually landing, and with the arrival of the wet season in the southwest region, the number of furnace enterprises is increasing, and the production is gradually increasing, resulting in increased supply pressure. On the demand side, the fundamentals of polycrystalline silicon are weak, with sluggish demand and limited orders; The frequent decline in prices of organic silicon monomers has weakened support for industrial silicon. At present, there is a serious supply-demand imbalance in the industrial silicon market, and the high inventory pattern of manufacturers is difficult to change. Futures prices have stabilized, and it is expected that industrial silicon will maintain weak stability in the short term. In terms of operating rate, major factories have recently resumed production, with operating rates rising to over 70%, posing a significant risk of inventory accumulation. In the first half of the year, most individual factories' shipments did not meet expectations, and the decline in demand in the second quarter further intensified the pressure to accept orders. The probability of collaborative production reduction in the future is not high, and it is more likely that they will be forced to voluntarily reduce production.
In such a complex market environment, in order for silicone enterprises to stand out in the existing market competition, they cannot rely solely on price wars, but should focus on improving product quality and technology, actively innovating and upgrading products, in order to seize the high ground in the market.