Continue to make concessions! In the new week, despite approaching the end of the month, downstream end of month stocking demand is still slowly progressing, and most companies are in negotiations and waiting for opportunities to lower prices to buy at the bottom. In the DMC market, individual factories with high inventory at the end of the month have a strong willingness to ship and continue to engage in price for quantity operations. However, some units in the Jiangsu and Zhejiang regions have undergone maintenance, and the decline of some individual factories may have narrowed. In addition, under the continuous concession, the profits of each individual factory are facing losses, and the willingness to concession has gradually weakened. The negotiation space is back and forth between 100-200 yuan/ton.
There are many negative factors in the current organic silicon market, and upstream and downstream enterprises have their own operating pressures. The game between supply and demand has intensified. According to our understanding, major manufacturers once again offered discounts on raw rubber yesterday, with multiple companies trading below 12000 yuan/ton. As of August 25th, the transaction price of raw rubber was between 11500-11800 yuan/ton. In the short term, with low prices still stimulating, there will be a certain amount of stocking demand released at the end of the month, which is expected to promote a warmer market transaction atmosphere. However, the rebound operation still needs to focus on the degree of improvement in demand.
On the cost side: On the supply side, the production in the southwest region is currently stable, while the expected resumption of production by large factories in the northwest at the end of the month is still uncertain, and the overall production capacity situation has not fluctuated much. In terms of demand, with the support of macro policies, the price of polycrystalline silicon continues to fluctuate and rise, which has a certain increase in industrial silicon procurement; In terms of organosilicon, the feedback on price for quantity exchange is poor, which is coupled with the average purchase of industrial silicon by monomer factories. Overall, the current industrial silicon market is relatively stable. Yesterday, the closing price of the main futures contract Si2511 was adjusted back to 8675 yuan/ton, while the spot price of 421 # metal silicon was quoted at 9600-10400 yuan/ton, with some rising by 100 yuan. The industrial silicon market is showing slight fluctuations, and due to the risk of inventory surplus, there is significant upward pressure. It is expected that the price of industrial silicon will continue to fluctuate within a certain range in the short term. In terms of operating rate: Last week, a single plant in Zhejiang underwent a load reduction maintenance, resulting in a decrease in operating rate. However, the operating rate of the plants in the northwest and north China regions remained relatively high, causing the overall operating rate to remain around 70%. At the end of the month, due to the slow stocking pace of downstream enterprises, individual factories may experience difficulties in shipping, and some individual factories may reduce production to reduce losses.
On the demand side: There is only one week left until the "Golden September", and a new round of stocking period may come at the end of the month. However, from the current market situation, the level of terminal consumption has not yet recovered, and the pattern of weak demand makes it uncertain whether the traditional peak season of "Golden September and Silver October" can truly come. In addition, it is understood that several large orders are still under negotiation in the near future, and leading manufacturers have also increased their concessions for some products, making it unclear when downstream large players will enter the market. Currently, downstream enterprises tend to adopt a wait-and-see and wait for a decline strategy, with a focus on essential procurement. Overall, the industrial silicon market has stabilized and slightly increased, theoretically providing some support for individual factories to stop the decline; However, under high operating rates, midstream and downstream enterprises believe that the risk of upstream inventory accumulation is high, so they adopt a cautious attitude towards hoarding and continue to seek lower priced sources of goods. In this context, if a single factory wants to achieve the expected destocking target, it can only reduce production or further incur losses, leading to the forced shutdown of peer facilities. It is worth noting that the strategy of trading price for volume is difficult to maintain in the long run. If the terminal demand fails to achieve a breakthrough recovery, the fundamentals of organosilicon will continue to weaken, and the market will fluctuate repeatedly between bottoming out and rebounding.