As this week draws to a close, the heat in the silicone market has not returned to stability as the upward trend gradually recedes. Against the backdrop of ongoing geopolitical conflicts, the prices of multiple upstream raw materials have significantly increased, exerting significant cost transmission pressure on some organic silicon related products.
In terms of raw materials, methanol futures contract 2605 closed at 2553 yuan/ton yesterday, and spot prices rose to 2050-2540 yuan/ton. In this context, methanol enterprises with scale and cost advantages benefit significantly. In the future, with the intensification of supply tension, methanol prices are expected to continue to rise, supporting DMC prices from the cost side.
From the on-site perspective, individual factories have mainly focused on delivering preliminary orders this week, with average new order transactions. The mainstream DMC quotation has remained stable at 14000-14300 yuan/ton. Middle and downstream enterprises generally maintain high inventory levels, and in the short term, procurement is still mainly focused on restocking for essential needs. Large scale stocking has not yet been initiated.
In addition, with the high prices of raw material 107 adhesive and crosslinking agent, several silicone adhesive companies finally couldn't bear it. Yesterday, they began issuing price increase letters, announcing a 5% to 10% increase in product prices, and stated that they will closely monitor the trend of raw materials in the future, and do not rule out the possibility of further price adjustments. At the same time, due to the cancellation of the export tax rebate policy in April, some silicone rubber companies have made considerable shipments and issued new price adjustment notices to overseas customers.
On the cost side of industrial silicon: on the supply side, the southwest region is currently in a dry season, with electricity prices maintaining high levels throughout the year, and silicon plants generally reducing their production load; In the northern region, major factories in Xinjiang have plans to resume production within this month, and there is an expectation for an overall increase in production capacity. In terms of demand, downstream demand for organic silicon and polycrystalline silicon remains weak, and the supply-demand contradiction in the industry has not eased, resulting in limited purchasing willingness. In addition, on the news front, top enterprises in Xinjiang have reported an increase in the purchase price of electricity in the eastern region, which has boosted market sentiment in the short term. However, under the constraint of high inventory, the price rebound is more driven by sentiment and lacks substantial fundamental support.
Overall, boosted by news, the closing price of the main contract for industrial silicon futures Si2605 rose by 190 to 8565 yuan/ton yesterday. However, the pattern of oversupply has not changed, and the market fundamentals have weakened, causing the spot price of 421 # metallic silicon to fall to 9400-10100 yuan/ton, a weekly drop of 100-150 yuan. It is expected that the market will continue to fluctuate within a certain range in the future, and it is necessary to continue to pay attention to the progress of major factories resuming production and changes in policies related to the Two Sessions.