The new autumn season has come to an end, with sparse rain and dew on the mountains and snow. As we enter November, the rise of organic silicon is short-lived, ushering in a major reversal! The opening showed a weak and stable situation. In the context of sluggish demand in the overall environment and limited macro benefits, the imbalance between supply and demand in the silicone market is difficult to fundamentally improve in the short term. Even though some individual factories rebounded on the last day of last month, the market dominated by demand still showed signs of decline, resulting in a virtual increase in DMC prices. The market transaction price is generally around 11000 yuan/ton, and the spot exchange transaction price of Shandong individual factories is 10900 yuan/ton.
At present, the unexpected surge has been shattered, and the market has returned to reality. Although some individual factories have always insisted on reducing production and load, it is still difficult to balance the huge production capacity. In addition, some individual repair facilities will resume operation in November, and the risk of accumulated inventory on the supply side is still high.
At the beginning of the month, in order to stabilize operations, individual factories often adopt price stabilization strategies. However, some companies have secretly returned to the situation of giving discounts in order to plan ahead and accept orders this month. After stocking up in moderation last week, midstream and downstream enterprises returned to a conservative and wait-and-see attitude this week, and lowered prices for inquiries. It is expected that DMC's external quotation will remain at 11200-12000 yuan/ton in the short term, and the transaction price will continue to fluctuate around 11000 yuan/ton.
Industrial silicon: On the supply side, the southwest region has entered a dry season, causing seasonal production cuts, while the north has reduced production due to rising costs. At the same time, with active downstream procurement in the early stage, inventory pressure has eased, and the reluctance of enterprises to sell has increased, resulting in overall supply tightening. In terms of demand, it is expected that polysilicon companies will reduce production in November. At the same time, in terms of organic silicon, there is limited demand and overall demand is average, which will have limited impact on the price of industrial silicon. As of November 3rd, the closing price of the main futures contract Si2601 is 9140 yuan/ton, and the price of chemical grade 421 # silicon metal on the raw material side is 9800-10200 yuan/ton.
Overall, supply contraction and demand decline coexisted in November, with the expectation of supply side production cuts providing some support, and the news of the polysilicon joint platform boosting market sentiment. However, the actual landing time is uncertain. Against the backdrop of weak fundamentals, the industrial silicon market may present a long short game state, which to some extent exacerbates market volatility. It is expected that the market will show a stabilizing trend in the short term.
In terms of operating rate: The current operating pattern of individual units remains unchanged, with multiple units in Zhejiang, Shandong, Yunnan, Hebei and other regions maintaining maintenance or reducing production. The overall operating rate remains at around 70%, with a focus on the restart of some maintenance units in November. Considering the poor sustainability of new orders, it is expected that some individual factories may re-enter the maintenance line under the dual pressure of inventory accumulation and losses in the future.
On the demand side: In the current situation where there is no significant improvement in terminal demand, midstream and downstream enterprises generally adopt an on-demand production model, steadily promote order delivery, while avoiding excess risks, controlling inventory consumption pace, and relatively conservative in procurement. In the future, due to the trend of new orders being out of stock, enterprises continue to face bidding crises. Under the market pressure of a desperate situation, small and medium-sized enterprises can only remain calm, maintain operations, and stabilize cash flow to survive this "cold winter".
Overall, with the failure of the "Golden September and Silver October" market and the one-day increase in DMC prices, the transmission of macro policies is limited, and the market in November is difficult to be optimistic. Yesterday's trading atmosphere was light, and the focus of transactions continued to shift downwards. It is expected that the supply-demand tug of war will continue in the short term, and the organic silicon market may show a pattern of clear stability and hidden decline.