On Wednesday, the overall organic silicon market showed a strong operating trend. From the on-site perspective, most individual factories are promoting emission reduction in an orderly manner, and the three on one inspection action is gradually being carried out to ensure the implementation of emission reduction policies. At present, some facilities have increased their emission reduction efforts in December and January to avoid parking during the Spring Festival. Therefore, the current operating rate is around 65%. Combined with the low inventory of individual factories, it is expected that the willingness to raise prices before the year will be strong. This week, DMC remained stable at 13500-14000 yuan/ton, although overall it has risen by more than 2500 compared to the previous low! But this round of price adjustment mechanism is based on the highest cost of individual factories, ensuring that all production enterprises have profit margins. As far as we know, the enterprise with the highest DMC cost is between 13400 and 13500 yuan/ton. Therefore, from the current price perspective, the bottom support is sufficient and there is no short-term downward basis. And in order to further promote the digestion of the second round of gains, it is highly likely that the third round of price exploration will be launched in late December, but the increase is relatively small.
Overall, this joint emission reduction is not only an emergency measure to cope with short-term losses, but also an active adjustment in the face of the contradiction of long-term overcapacity and increasing losses. At the same time, it is also a way to restore supply and demand balance and rebuild market pricing discourse power. In addition, this round of price increases will be carried out in a "step-by-step manner", giving the middle and lower reaches a certain amount of time to digest the increase and jointly promote the orderly return of the market to balance. If the subsequent emission reduction is synchronized with the winter storage in the middle and lower reaches, it is expected to continue to show a stable and upward trend before the year.
Raw rubber market: DMC prices have remained stable with some progress. Currently, the price of raw rubber remains at 14500-15000 yuan/ton. On the supply side, with the recent reduction in emissions from individual factories, the raw rubber equipment has been operating at a reduced load, resulting in a decrease in market supply compared to before, and there is no short-term inventory pressure. On the demand side, due to the impact of previous price increases, rubber mixing enterprises have a large stock of inventory, which still needs to be digested. In addition, there are many goods in transit, so the purchasing enthusiasm this week is not high. However, some enterprises have a demand for timely replenishment, and spot procurement is still following up, which to some extent supports the confidence of raw rubber enterprises in stabilizing prices, and the high price trading volume has increased accordingly. This week, with the dual support of supply and demand, the price of raw rubber market has remained stable. If downstream enterprises accelerate their inventory digestion speed in the future, procurement demand may continue to rise, driving the price of raw rubber to continue to rise.
High temperature silicone rubber market: The mainstream quotation for mixed rubber this week is 13500-13800 yuan/ton. In terms of procurement, the current trend of raw rubber prices is relatively strong, and at the same time, traders tend to sell at low prices after destocking, which has prompted some rubber mixing enterprises to stock up appropriately at high levels. However, in the long-term bidding situation, the profitability of rubber mixing has always been limited, and the current prices are difficult to promote large-scale procurement and stockpiling. Overall, the focus is on basic needs. In terms of shipment, although downstream silicon product companies continue to adopt a cautious attitude towards on-demand procurement of mixed rubber compounds, with the strong upward trend, some silicon product companies have low inventory levels. In order to avoid subsequent cost increases, the actual demand for replenishment has increased, which is beneficial for the shipment of mixed rubber compound companies. Overall, under the trend of cost strengthening, rubber mixing enterprises have an upward expectation for the subsequent trend, and low-priced sources of goods will decrease accordingly. It is expected that the market will maintain a stable and positive trend in the short term. In terms of silicon products, during the year-end sprint stage, silicon product companies are also actively exploring the market. According to multiple silicon product companies visited by our organic silicon mall, they are not only striving to achieve annual sales, but also making new arrangements for production in 2026 ahead of schedule. This mindset shift is expected to gradually drive the production and sales of silicone products enterprises to rebound in the coming period, thereby having a positive impact on the demand side of the entire silicone rubber market. Overall, the game between upstream and downstream is still ongoing, but the supply and demand pattern in the market is slowly adjusting. Against the backdrop of tight supply, low inventory levels, and the release of replenishment demand, the market continues to show positive signs. In short, upstream and downstream enterprises are building and further deepening collaborative self-discipline mechanisms to help the market return to a healthy bidding state, and the organic silicon market is gradually returning to the right track.