At the end of the month, the silicone market showed a stable and positive trend. From the perspective of the on-site situation, with the approach of the individual factory's self regulatory plan in December, the market has reached a consensus on the contraction of future supply. In this context, although the current terminal consumer market is still relatively flat due to the off-season, midstream and downstream enterprises have expectations of reducing raw material DMC. Therefore, in order to avoid upstream reluctance to sell and cost increases in the future, they may moderately stock up at the end of the month, increase inquiries and buy in at low prices, which will provide some support for DMC prices. Currently, DMC prices range from 13100-13300 yuan/ton and remain firm.
In short, although there has been no substantial improvement in the overall environment, under the call for "anti involution" and the coordinated emission reduction layout of the industry, the mentality of upstream and downstream enterprises has turned positive. Under the resonance of supply contraction expectations and downstream demand, the market has gradually shaken off the disorderly low price war and is expected to maintain a strong operation in the short term.
Industrial silicon: From the supply side, the southwest region is in a dry season, with reduced production and low supply. Although some facilities in the northern region have slightly increased production, the overall supply is showing a contraction trend. In terms of demand, the production of polycrystalline silicon has fallen due to the end of the wet season, and there is an expectation of joint emission reduction and price increase in the organic silicon industry. Overall, the demand for industrial silicon procurement has weakened.
Overall, although inventory has recently decreased, the total amount is still high, and the industrial silicon market maintains a weak supply-demand pattern. As of November 24th, the closing price of futures Si2601 contract was 8940 yuan/ton, and the spot price of 421 # metal silicon was quoted at 9800-10200 yuan/ton, partially falling by 100 yuan. It is expected to remain mainly volatile in the short term.
In terms of operating rate: The current operating rate of individual factories remains the same as last week, and the industry is closely monitoring the implementation of emission reduction in December. From the current price perspective, mainstream large factories have seen an increase in profits, while those with higher local production costs still find it difficult to make profits. Therefore, from the perspective of reducing emissions from the supply side to support prices and increase profits, individual factories still maintain a consistent attitude.
On the demand side: The current performance of terminal consumption is still weak, but at the macro level, the promotion fee policy continues to be favorable, and the downstream market mentality has changed due to the expected contraction of raw material and by-product supply, gradually accepting the current increase. At the same time, the previously suppressed demand due to delayed stocking has also been released, and downstream prices have followed suit. High priced new orders are also being pushed forward. If the upward trend spreads smoothly, companies with low inventory at the end of the month may stock up appropriately, and upstream companies will further adjust their December quotes and operating rates based on the conversion of the increase.
This week, although there is still financial pressure on enterprises at the end of the year, and the focus of operations is mostly on receiving payments and maintaining core customers, market expectations are gradually improving under the synergistic effect of supply contraction and demand follow-up.
Overall, "industry self-discipline" is driving the nerves of the silicone market, with major manufacturers shifting their focus from "production sales" to "sales based production". If 30% emission reduction is implemented in early December, demand still falls short of expectations, and there is hope to increase emissions reduction to ensure supply-demand balance. Therefore, the short-term trend is still stable and upward. From the perspective of the entire industry chain, currently silicone oil, silicone rubber, and mixed rubber are actively adjusting prices to keep up with the rise, and the disorderly competition situation in the industry is improving. We need to cherish the hard won achievements, and it is particularly important to stabilize the confidence of the middle and lower reaches at this stage. In addition, anti involution does not mean non competition, but a shift towards differentiated competition. Enterprises need to continuously innovate, increase research and development investment, and continuously optimize product performance to meet the market's demand for high-quality organic silicon, thereby driving the industry to move towards a higher level.