December 15th News: The Central Economic Work Conference, which just landed last week, has clearly stated that expanding domestic demand and promoting consumption are the top economic tasks for next year. The meeting clearly pointed out that the current economy is facing the prominent problem of "strong supply and relatively insufficient demand", and emphasized that this contradiction is quite obvious, which is expected to become the key to addressing and resolving the economic work focus next year. It is worth noting that, unlike the previous policy orientation that focused more on demand side regulation, it is expected to work together from both the supply and demand sides next year, which is in line with the policy orientation of prioritizing both "expanding domestic demand" and "anti internal competition" next year.
The meeting also proposed to implement a new round of high-quality development actions for key industrial chains, and it is expected that a group of industries that play a key role in filling gaps and forging long boards will receive a new round of policy support. Industry analysis suggests that the organic silicon industry chain has significant potential for high-quality development, and the incremental market is expected to quickly open up. In terms of competition order, the meeting clearly stated the need to deepen the governance of "internal competition", upgrading from the past "comprehensive rectification" to "in-depth rectification". This means that "anti internal competition" will be closely linked and mutually promoted with "expanding domestic demand", becoming an important mainline running through the economic work in 2026.
Last week, the organic silicon market continued to operate strongly under tight supply and cost push, and the industry believes that prices in the upstream and downstream of the industrial chain have all turned upward. The industry has entered an intensive maintenance period at the end of the year, coupled with joint price increases and self regulatory production restrictions by enterprises, reducing emissions by 30%. The bullish sentiment in the market has been consolidated, and the prices of major products have achieved a general increase.
Last week, the market completed the second round of overall price increases and entered the digestion stage. As of December 13th, the mainstream quotation for DMC has risen to 13500-14000 yuan/ton, with a cumulative rebound of 15% -20% since the low point in November. The main products such as 107 glue, raw glue, and methyl silicone oil have been raised by more than 3000 yuan simultaneously. Currently, raw glue is priced at 14500-15000 yuan/ton, 107 glue is priced at 14000-14500 yuan/ton, and domestic methyl silicone oil is priced at 15500-16300 yuan/ton. The current midstream and downstream stocking orders are well received, and traders have a clear reluctance to sell, resulting in a simultaneous increase in market trading volume and price. Despite the gradual pressure from downstream acceptance of high prices, which led to a slower upward trend in the later part of the week, industry players still hold strong expectations for the short-term trend.
Supply side: Maintenance differentiation and proactive production restrictions. This year's maintenance pace is significantly different from previous years. Affected by the continuous pressure on industry profits and overcapacity, the traditional load increase window did not appear in the fourth quarter. Instead, unplanned maintenance increased due to losses, resulting in significant differentiation in enterprise operating rates. This directly reflects the imbalance of supply and demand structure after the rapid expansion of production capacity. More noteworthy is that major individual enterprises have launched a three-month "voluntary emission reduction inspection action", strengthening implementation through cross factory inspections, third-party supervision, and other means. This will create sustained supply constraints in the future and provide solid support for the bottom of prices.
Demand side and cost transmission. The main driving force behind the current price increase comes from the expectation of supply contraction and joint price hikes by producers. Downstream demand is mainly driven by rigid procurement and periodic stocking, and the driving force for continued follow-up on high prices remains to be observed. The social inventory in the East and South China markets is at a low level, providing space for price increases. However, the differences in transaction pace between regions indicate that the transmission of terminal consumption still requires time.
Outlook for the future: In the short term, supply side maintenance and production restrictions will continue, coupled with the increased willingness of enterprises to rush towards the end of the year, the market supply and demand will maintain a tight balance, and prices are likely to show a pattern of high volatility, stable to strong. If the current price increase is smoothly transmitted downwards, industry profits are expected to enter the repair channel. It is expected that around the end of the month, under the combined effect of low inventory and policy expectations, the market may explore a new round of price adjustments. The direction of the industry in the medium to long term still needs to be observed in terms of the adjustment of production capacity and operating rate next year, as well as the substantive impact of the "anti internal competition" policy on the competitive order.
The core viewpoint of industry experts is that last week the market was dominated by supply and the sentiment was positive. The industry is attempting to reverse the downward trend in prices through phased self-discipline and production restrictions, but sustainability depends on the real carrying capacity of the demand side and the fundamental alleviation of overcapacity. The price is relatively strong in the short term, but the trend reversal needs to wait for substantial improvement in the supply and demand pattern.