Entering Friday, the organic silicon market continued to operate steadily. From the perspective of the market, after experiencing a wave of phased replenishment of essential needs, the pace of transactions has slowed down and entered a period of stable digestion. Due to the slower than expected recovery of terminal demand, the wait-and-see attitude of middle and downstream enterprises has intensified, and they tend to remain cautious in their operations, with procurement mainly focused on essential needs. In terms of individual factories, there are currently sufficient pre-sale orders, coupled with the continuous promotion of emission reduction policies, resulting in limited overall supply pressure. Under the interweaving of multiple favorable factors, individual factories have a strong willingness to raise prices. Yesterday, some companies closed down and did not report, adding a bullish atmosphere. Currently, the overall trend is still to maintain stable prices for shipments.
Due to the combination of various cost increases, the silicone adhesive market has a strong sense of follow-up and the market continues to rise. In the past two days, the Guangzhou Curtain Wall Exhibition has been in full swing, with multiple companies continuing to issue price increase letters, with price increases ranging from 5% to 10%, strengthening expectations of price increases.
In addition, upstream cost pressures continue to increase. Affected by the geopolitical game between the United States and Iran, international oil prices have rebounded significantly in recent days, with Brent crude oil prices briefly exceeding $100 per barrel yesterday. If the Strait of Hormuz continues to be blocked, oil prices may see a new round of rise. At the same time, with the continuous emission reduction of monomers in recent months, the amount of by-products has also decreased, and the overall supply of Class III has become tight. According to our understanding in the organic silicon mall, most monomer factories have closed their stocks and are temporarily not accepting orders. The market price has also risen to 15500-16000 yuan/ton, a significant increase of 1000-1500 yuan/ton compared to Class III before the year. The industry expects the price to rise to 17000 yuan/ton, which will affect the price of silicone ether and continue to rise, with limited sales. Overall, although the traditional peak season has not yet fully started, the current high prices of raw materials and good support for corporate orders are still running. In addition, the international situation is still turbulent, and cost pressures from the energy sector are gradually spreading to the silicone industry. Coupled with some companies' lockdowns and load reductions, the industry's expectations for price increases have been strengthened. However, considering the cancellation of tax refunds in April and the coexistence of cautious attitudes, domestic demand in the short term will focus on the trend of commodity prices, the recovery of terminal demand, and external geopolitical conflicts.
On the cost side of industrial silicon: on the supply side, the southwest region is in a dry season, and the operating rate remains low; The Xinjiang region maintains a medium to high level of production, and some manufacturers plan to resume production in the future, resulting in relatively abundant overall inventory. In terms of demand, downstream polycrystalline silicon and organic silicon enterprises have generally reduced production, with a focus on a small number of urgent demand inquiries in the near future, resulting in limited overall purchasing willingness.
Overall, both the supply and demand sides of the industrial silicon market have contracted, but the total supply remains high and the pace of destocking is slow. Affected by market sentiment, the market has shown a short-term volatile pattern. As of March 12th, the closing price of the main futures contract Si2605 has risen to 8645 yuan/ton, while the spot price of 421 # silicon metal remains at 9400-10100 yuan/ton. It is expected that the market will continue to experience weak fluctuations in the short term, and in the future, we need to focus on the pace of major factories resuming production and the process of inventory reduction.