The major trends in the industry are all rolling, find opportunities in the segmentation! This year, the global silicone product consumption market is undergoing profound changes, and consumers' demand for personalization and scenario based products is showing a trend of refined development. This trend has put forward multidimensional requirements for upgrading the capabilities of overseas enterprises: on the one hand, they need to strengthen their ability to build brand value, and on the other hand, they urgently need to establish a rapid response mechanism for demand. Specifically, enterprises should focus on enhancing the following core competencies: 1 Establish a dynamic user insight system to accurately capture consumer demand; 2. Improve the rapid iteration mechanism of products and continuously optimize the product matrix based on scenario requirements; 3. Build a full chain service experience and enhance consumer satisfaction through AI digital means. This market evolution requires overseas silicone enterprises to transform and upgrade from traditional product output models to comprehensive solution providers with brand premium capabilities and agile service systems.
Weekly observation of the organic silicon market: prices have rebounded strongly, and the industry chain is welcoming a general upward trend. Recently, the national level has released a signal of "anti internal competition", promoting the orderly exit of backward production capacity, boosting market sentiment, and helping the rebound of organic silicon prices. Last week, the domestic organic silicon market showed a comprehensive upward trend, with prices in various links of the industry chain rising in tandem. Among them, crosslinking agents and silicone platinum catalysts have become the leading products, and platinum prices have reached a new high since 2010, with a cumulative increase of over 35% this year. Looking back at the first half of the year, the organic silicon market is still in a state of "connecting the past and the future" operation. Overall, the global situation is "strong on the outside but weak on the inside", with profits of domestic organic silicon enterprises declining instead of increasing, market demand fluctuating, and although some major listed companies had the best inventory and sales compared to the same period in history at certain stages, the performance of organic silicon prices still "continued to fall", and the "internal competition" of the organic silicon industry in the first half of the year exceeded common understanding.
In terms of price dynamics: (Shandong Fengdao Enterprise DMC reported 10700 yuan/ton (+400 yuan/ton); Other individual enterprises have increased by 200-300 yuan/ton; The overall market quotation center has shifted to above 11000 yuan/ton. Analysis of favorable factors: 1 Cost side support strengthening: Under the stimulation of macroeconomic policies, the industrial silicon market has seen a synchronous increase in both expected and current prices, providing a solid cost foundation for DMC prices; 2. Optimization of inventory structure: Low price orders have been well digested in the early stage, and the inventory pressure of individual enterprises is currently within a reasonable range; 3. Market sentiment reversal: After a sustained downturn, the industry's bullish sentiment is concentrated and released, forming a driving force for upward momentum. The industry believes that this is just the beginning, and the current price increase has formed a resonance in the industrial chain. In the short term, the cost driven upward trend may continue.
It should be noted that the current silicone market is still in the off-season of demand, and with the end of environmental inspections and improvement in profit margins, small and medium-sized individual factories may resume production in the later stage. As of this weekend, the overall operating rate has risen to around 70.5%. In addition, price increases will suppress downstream demand and speculative demand. Looking ahead to the future, the industry believes that it should be viewed in two stages: from July to late August, the expectation of increased macroeconomic policies still exists, and the expectation of safety supervision upgrades in the main production areas of Shandong and Xinjiang in August still exists. During this stage, the price of organic silicon may continue to rebound. After late August, macro policies will gradually be implemented, and the silicone market will enter the verification stage of peak demand in September. The probability of demand falling short of expectations is high, and prices may experience a second dip at that time. In the short term, with a strong bullish atmosphere in the market, the price of organic silicon is expected to remain strong. In the long run, the market pattern of oversupply has not fundamentally changed, and the fluctuation of organic silicon prices has intensified, with the center of gravity shifting upward from the low point in the first half of the year, but the magnitude is limited. It is expected that organic silicon prices will be stronger in the third quarter than in the fourth quarter. It is recommended to pay attention to the downstream demand carrying capacity and the actual production capacity reduction pace of leading enterprises, which will become key variables affecting the sustainability of the subsequent market.
Single unit device dynamics: Last week, the market received good low-priced orders. Currently, the top three single unit production enterprises in the industry are still in a period of centralized maintenance, and it is expected that production will resume gradually by the end of this month. The current order reserve is relatively sufficient, especially for some devices in Dongyue, Sanyou, and Yuntou, which have gradually resumed production, driving the overall operating rate of the industry to increase by 5 percentage points month on month. The downstream purchasing side is currently maintaining a cautious attitude, with a weak willingness to stock up. Some large players are keeping a wait-and-see attitude in the short term and closely monitoring price trends. According to the current supply and demand pattern, the turning point of individual inventory may occur in September. If the subsequent new orders continue to be sluggish, some enterprises with high inventory pressure may be forced to initiate load reduction maintenance. However, it should be noted that reducing load will lead to an increase in unit production costs, so companies will be extremely cautious when making decisions and will not easily take measures to reduce production unless necessary.
DMC market dynamics: Last week, the domestic DMC market began to rise in price, with prices ranging from 10700 to 12300 yuan/ton. From the perspective of the spot market, the overall performance of the fundamentals did not change during the week, with supply side equipment on and off intertwined. The industry's overall supply was stable with a slight decline, while downstream consumption was in a prominent off-season. DMC spot trading was still acceptable, and coupled with the continuous rise of silicon metal raw materials, DMC costs also continued to rise. Individual factories had a collective bullish attitude, and holders followed suit to flexibly negotiate. The center of gravity of DMC cracking materials in the East and South China markets stopped falling, with few purchases. The trading atmosphere of DMC cracking materials was quiet during the week.
107 Rubber Market Dynamics: There was limited guidance on fundamentals last week, with a follow-up increase of 100-200 yuan and a price fluctuation range of 12500-13500 yuan/ton. Multiple 107 adhesive units have been shut down for maintenance, while other manufacturers have maintained high load production. The total inventory of spot goods continues to increase, and the bearish atmosphere in the market has weakened. Traders have shown more intention to sell flat. Due to the impact of the off-season demand, terminal silicone adhesive users have a wait-and-see attitude, and continue to consume existing inventory in the short term. The overall transaction follow-up is stable.
Silicone oil market dynamics: Last week, there were limited changes in the supply of silicone oil equipment, and the previous load reduction and maintenance operations continued. The raw material support continues to strengthen, and the bullish sentiment in the silicone oil market is gradually emerging, with mainstream brand market prices fluctuating by 100-200 yuan/ton. Affected by the off-season demand, downstream and terminal loads in various fields have declined to varying degrees, with multiple negative factors overlapping. The focus of negotiations in the silicone oil market has remained stable with increasing volume, and the mentality game between supply and demand continues. It is reported that domestic methyl silicone oil transactions are mostly over 13000 yuan/ton, foreign brand silicone oil transactions are mostly over 17000 yuan/ton, and cracking material silicone oil transactions in South China are mostly over 12000 yuan/ton.
Market dynamics of raw rubber: Last week, the supply of raw rubber in the market tightened, and with some factories selling out their low-priced orders in July, it is expected that prices will mainly rise in the short term. The prices of various types of rubber compounds in the market are also showing a strong trend. Overall, the cost support of raw rubber is strong, and prices have shown an upward trend, with an overall increase of 100-200. It is reported that the contract transaction price of raw rubber last week was mostly within 11700-11800 yuan/ton, and the individual customer price was still above 13000 yuan/ton.