Entering December, the organic silicon market continues to steadily rebound driven by industry self-regulation and emission reduction expectations. From the on-site perspective, there is currently a positive shift in downstream stocking sentiment: due to the firm stance of individual factories in raising prices and the general expectation of future supply contraction and cost increase in the market, downstream enterprises have significantly increased their willingness to lock in monthly basic inventory in advance to avoid future passive procurement situations. At the same time, some companies that had already digested their inventory to a low level last month have a pressing need to replenish their inventory, jointly driving the increase in market trading activity.
In this context, the entire organic silicon industry chain will form a good virtuous cycle: upstream companies will implement emission reduction measures, steadily increase prices, and high priced new orders from middle and downstream enterprises will gradually be transacted, further consolidating the market rebound trend. At present, the mainstream quotation of DMC has stabilized in the range of 13100-13300 yuan/ton. According to our understanding at the Organic Silicon Mall, the emission reduction plans for each individual factory have been preliminarily determined, and staggered emission reductions will be implemented according to the different situations of the enterprises. It is expected that the emission reduction of 30% will last for about three months.
Looking ahead to the future, with the gradual implementation of the 30% emission reduction policy, the load reduction of individual plant equipment will directly push up production costs. In the context of maintaining a tight balance between supply and demand, there is still room for the price of organic silicon to rise. In addition, according to our understanding, an industry conference will be held this Thursday, and market confidence is expected to further strengthen. Prices may break through the 13500 yuan/ton mark, and the short-term trend is expected to be mainly stable in the upper middle range.
Industrial silicon: The industrial silicon market continued to fluctuate this week. On the supply side, the shortage of hydropower resources in the southwestern production areas has led to the shutdown and maintenance of some small and medium-sized industrial silicon facilities, resulting in a contraction of overall market supply. The demand side support is clearly insufficient, with polysilicon and organosilicon simultaneously lowering their operating levels, and the procurement demand for industrial silicon synchronously falling. The overall demand shows a stable to weak trend.
Overall, the imbalance between supply and demand of industrial silicon has not been fundamentally alleviated, and there is a lack of driving factors for a significant increase in prices in the short term, which will continue to be dominated by range fluctuations. As of December 1st, the closing price of industrial silicon futures contract Si2601 was 9145 yuan/ton. Constrained by the weak supply-demand pattern, the futures price has been fluctuating within a narrow range, and the market trading sentiment is cautious. The spot market quotation is relatively stable, with the mainstream quotation for 421 # metallic silicon remaining at 9800-10200 yuan/ton.
In terms of operating rate: It is understood that the target plan of reducing emissions by 30% in this round of industry will continue to be implemented for three months. Some manufacturers in Jiangsu and Zhejiang have already started emission reduction actions, and will gradually start off peak emission reduction of 30% based on enterprise inventory and actual situation in the future. It is expected that the overall construction level will decline this month, and the contraction effect on the supply side will gradually emerge, further consolidating the market's confidence in the future.
Demand side: The current demand market for organic silicon will be centered around the orderly release of essential needs, showing a slow recovery trend. Upstream individual factories have a clear attitude towards pricing, relying on the dual advantages of having inventory within a reasonable range and ample reserves of orders on hand. If the self-discipline and emission reduction policies of the upstream industry can be solidly implemented and continuously promoted, and the conversion of high priced orders is good, as the low-priced inventory of middle and downstream enterprises is consumed, in order to ensure production continuity and avoid the risk of subsequent cost increases, enterprises that actively initiate high priced inventory replenishment may continue to expand, and the demand for replenishment is expected to become a key driving force for market warming.
Overall, the current upward trend in the organic silicon market is becoming more rational and orderly. The marginal improvement on the current demand side is more of a positive feedback to the supply side, and the support for prices still revolves around "stable and adaptable". It is worth noting that upstream enterprises have strong confidence in implementing emission reduction plans, and the time span of this round of emission reduction plans is clear, providing sustained expected support for the market. In this context, the subsequent price trend may exhibit the characteristics of "phased increase and steady progress", that is, in the tight supply-demand balance pattern, with the implementation of emission reduction, cost increase, and inventory depletion, prices may rise in stages and steps. In the short term, the price increase effect has gradually permeated the entire industry chain. In the medium to long term, the dynamic balance between supply and demand in the industry remains the core logic that dominates the operation of the silicone market.