In the new week, the silicone market is still carrying heavy loads. Specifically, the current mainstream quotation for DMC is 10700-11200 yuan/ton, and most individual factories' quotations have fallen below the cost line, especially with the rebound in the price of industrial silicon raw materials, which has intensified cost pressure and led to DMC being in a state of no further decline. On the demand side, due to the low price bidding in the early stage, most midstream and downstream enterprises have suffered significant losses when their inventory is not cleared. Nowadays, they are even less likely to stock up easily and continue to purchase for essential needs, controlling quantity and buying at low prices to balance supply and demand as much as possible.
In the current situation of significant supply-demand divergence, it is difficult for the DMC market to improve transactions, and there is still a tug of war in some areas. It is expected that upstream and downstream enterprises will enter the order digestion stage in the short term, and DMC prices may remain stable this week.
Cost side: On the supply side, with the support of electricity pricing policies, the northern region is expected to experience capacity growth, while the southwestern region is approaching a dry season with limited resumption of production, resulting in an overall loose supply side. On the demand side, the expected production limit for polysilicon in September has reduced the demand for industrial silicon; In terms of organic silicon, downstream demand has shown average performance, and under the poor profit recovery, individual factories have synchronously contracted their demand for industrial silicon.
Overall, benefiting from the anti involution policy, the spot price of industrial silicon futures has increased. However, due to the drag of demand, the upward space of spot prices is limited. Currently, the stable price range is 9600-10100 yuan/ton, while futures continue to be affected by macro positive factors. In addition, there have been recent reports of polysilicon storage and capacity reduction, which have led to strong short-term expectations and boosted the price of industrial silicon. Yesterday, the closing price of the main contract Si2511 was 8800 yuan/ton, continuing to rise by 75%. Looking ahead, with limited macro support and weak fundamentals, the short-term industrial silicon market continues to fluctuate.
In terms of operating rate: As time progresses, the feedback from new orders continues to be poor, and an operating rate of over 70% has led to supply pressure in the DMC market. Some individual factories have already accumulated inventory, and in order to avoid expanding losses, some individual units may enter maintenance in the later part of the year. Next, we need to pay close attention to the operating rate of individual units.
On the demand side: Under the call for anti involution, the market has been boosted to some extent, but in the short term, it is difficult to quickly implement the positive aspects. Currently, terminal orders are still few and far between. In addition, under the pressure of losses in the first half of the year, most silicon companies actively reduced their burdens, and the speed of digesting upstream raw materials has slowed down synchronously. The situation of oversupply in the market has intensified. At the same time, in the situation of poor shipment, middle and downstream enterprises are cautious in stocking their essential needs. Even though the National Day Golden Week is approaching and there may be a round of essential needs stocking before the holiday, most enterprises are bearish and wait-and-see, and it is expected that their pre holiday layout will also decrease. Negotiations on transactions are deadlocked with upstream enterprises.
Overall, although the current macroeconomic favorable policies continue to push forward, the traditional peak season has not yet recovered, leading to unstable market confidence. In addition, the previous period of low price competition resulted in severe losses. Currently, upstream and downstream enterprises are stabilizing their operations, making it difficult to initiate a new round of competition in the short term. In short, the organic silicon market presents a complex and unpredictable situation under the interweaving of multiple factors. In this situation, upstream and downstream enterprises are cautious and deadlocked with each other. It is expected that the supply and demand market will tend to be tightly balanced in the future, and enterprises will digest inventory to wait for clearer signals or turning points.