In the first half of the year, the total retail sales of cosmetics in China reached 229.1 billion yuan, setting a new high in nearly five years. The market size of China's cosmetics industry has exceeded one trillion yuan for two consecutive years, becoming the world's largest consumer market for cosmetics. Last year, domestic brands accounted for 55.2% of the transaction volume, surpassing international brands for the first time. The leading downstream enterprise of organosilicon revealed that the demand in the cosmetics industry was strong in the first half of the year, with order volume generally increasing by 10% -15% year-on-year, and product prices maintaining a stable trend.
Last week, the domestic silicone market showed a stable to strong trend. As a benchmark for the industry, the quotes from major individual companies in Shandong remain stable at 12300 yuan/ton, while other individual companies generally adopt a closed market strategy, resulting in tight spot circulation in the market. The average transaction prices of each product are: DMC 12450 yuan/ton, 107 rubber 13550 yuan/ton, raw rubber 13450 yuan/ton, silicone oil 14550 yuan/ton, showing a slight upward trend overall.
The market support factors mainly come from two aspects: 1 Continuous cost pressure: Currently, the price of silicon metal is still at a high level, and the phenomenon of inverted production costs for individual enterprises has not yet eased, forming a bottom support for prices; 2. Boosting export demand: Stimulated by the export tax rebate policy, the short-term growth of organic silicon export orders has been significant, driving the recovery of raw material procurement demand.
The market showed the following characteristics during the week: in terms of pricing, mainstream brand spot prices maintained narrow fluctuations, and the overall price level remained basically the same as before the market closure; Transaction situation: Market trading is mainly based on historical order replenishment, with limited new order transactions; Downstream dynamics: The silicone rubber and rubber compound market continues to rise, but there has been a slight decline in terminal order volume, leading to an increase in market wait-and-see sentiment, mainly focusing on low-priced inventory replenishment, and the market wait-and-see atmosphere is gradually becoming stronger. Psychological differentiation: The industry claims that the nature of demand side inventory replenishment has changed, shifting from hoarding and waiting for price increases to purchasing according to orders, and the pace of large-scale inventory replenishment has slowed down. Downstream enterprises have divergent expectations for the future market, with some holding bearish views. The current market is in a stage of supply-demand game, with cost support and weakened demand factors balancing each other. It is expected to maintain a volatile consolidation pattern in the short term. The current competition strategy in the organic silicon industry has shifted from "roll scale" to "roll cost", with clear advantages for top enterprises. Under the policy of capacity regulation and the recent tightening of environmental protection, the concentration of the industry is expected to further increase, and the fluctuation of organic silicon prices in the second half is also expected to flatten out. We need to focus on the price trend of silicon metal and the recovery of terminal demand in the future.
New trend of industry self-discipline: Top individual enterprises collectively propose to build a healthy industry competition ecology, with a focus on promoting industry capacity governance. Last week, several individual companies including Shandong, Xinjiang, Hubei, and Zhejiang explicitly stated their opposition to engaging in vicious competition through means such as dumping below cost, commercial defamation, and infringement of trade secrets. It is worth noting that this initiative proposes for the first time the "Three Principles of Competitive Ethics": 1 Price self-discipline red line: Establish industry cost accounting guidelines and eliminate predatory pricing; 2. Innovation protection mechanism: Establish a "whitelist" for industry technology research and development, and share patent warning information; 3. Service quality standards: Implement a service quality certification system to achieve differentiated brand competition. Industry experts believe that entering a new stage! This marks a new stage in which the competition standards in the domestic organic silicon market are expected to shift from policy regulation to enterprise autonomy. By establishing quantifiable indicators of competitive health, it is expected to change the industry's development model of 'incremental competition'.
Single unit device dynamics: It is reported that most production companies had saturated orders last week, and some even suspended accepting orders. Most companies' production plans have been scheduled until late August. From the perspective of regional supply, some large-scale facilities in Inner Mongolia, Xinjiang, and Zhejiang have gradually resumed production, driving the overall operating rate of the industry to rise to around 71.5%. In the short term, no new maintenance plan has been announced in the industry, and considering that some equipment will resume production about two weeks later than the original plan, it is expected that the overall operating rate of the industry will remain stable at a relatively high level of over 70% in August.
DMC market dynamics: Last week, the domestic DMC market was mainly closed, and Shandong Fengfeng Enterprise reported 12300 yuan/ton, holding steady. Based on the recent low production and sales pressure in the industry, the opening prices of major monomer factories on Saturday were mostly raised compared to last week, with a range of around 100 yuan/ton. From the perspective of the spot market, it is affected by the continuous stability of the ex factory price of individual factories and the smooth flow of goods for holders. During the week, inquiries in the East and South China markets were average, but transactions were still acceptable. Although the current DMC price has basically hit the historical average bottom, it has not effectively boosted the market's hoarding mentality, and downstream essential procurement has always been based on orders. Industry insiders believe that at the beginning of the month, DMC prices still have room to rise due to cost and supply side drivers. Based on the current price difference level with silicon metal, DMC cost pressure continues to increase.
107 rubber market dynamics: Last week, the spot price of 107 rubber fluctuated narrowly, and the overall market price change was limited. There were some large transactions in the market, with transaction prices ranging from 13000 to 13500 yuan/ton. The domestic 107 rubber raw material support has been strengthened, and the supply side has not changed at the moment. The supply remains stable. The downstream silicone adhesive field maintains a strong demand for replenishment, and it is expected that the price of 107 adhesive will remain stable this week.
Silicone oil market dynamics: Last week, the trend of silicone oil prices varied in different regions, with various manufacturers releasing their inventories in a concentrated manner. The operating mentality of industry players was boosted, and the intention to sell at a lower price gradually decreased. The market inquiry atmosphere was active, and mainstream offers continued to rise slightly. End users had a buying mentality of rising rather than falling, and some had on-demand replenishment behavior. However, due to the insufficient operating load of downstream factories, the follow-up of large orders was relatively limited. It is reported that the price of domestically produced methyl silicone oil is sold at 14300-14500 yuan/ton, while foreign brand silicone oil is mostly sold at 17500-18500 yuan/ton, and cracking material silicone oil in South China is mostly sold at over 13000 yuan/ton. There is still support for maintenance factors in August. Considering that silicone oil manufacturers currently have no inventory pressure and have short-term plans to increase prices, the fundamental performance will be relatively strong.
Market dynamics of raw rubber: Last week, the raw rubber market in various regions remained stable, with short-term stability and strong spot fundamentals. Supply remained low, with a decrease in new supply. The market procurement enthusiasm during the peak season of internal and external demand was still acceptable, and industry inventory continued to decline throughout the week, with strong support from the bottom of the industry. Last week, the contract transaction price remained stable at 13300-13600 yuan/ton, with individual prices mostly above 13700 yuan/ton. The demand side has a moderate acceptance of high priced goods.