Entering mid to late March, the upstream is calm like water, but the downstream is experiencing wave after wave of price increases! Recently, due to the geopolitical conflict between the United States and Iran, international crude oil prices have soared significantly. This has not only quickly spread to the petrochemical industry chain, but also led to the rise of various related raw materials in the silicone industry chain. This has stimulated silicone rubber companies to issue price increase letters intensively, and the market has shown a hot scene. However, behind this wave of price increases, the market's pursuit of high prices and stocking up sentiment is average. Upstream individual factories have maintained stable operation after a general increase of 300 in early March, and there has not been a clear positive news recently, which can drive a new round of upward trend. Resulting in midstream and downstream enterprises maintaining caution in procurement, with market transactions mainly focused on small orders for essential needs.
However, the price increase of raw materials came first, followed by the rise of silicone rubber, especially with the collective adjustment of various raw materials such as 107 glue, silicone oil, crosslinking agent, and silica. The long suppressed silicone rubber enterprises finally couldn't bear it. The March price increase letter flooded our social media. Yesterday, 3M, Bojunlai, Tiancai Silicon Industry and other silicone rubber enterprises successively adjusted the prices of their products, with an adjustment range of 5% -15%.
Industrial silicon: On the supply side, the resumption of production is being promoted in the southwest region, and large factories in the northern region are also expected to resume production, resulting in an overall loose supply pattern. On the demand side, downstream polycrystalline silicon and organic silicon will maintain a decrease in load, and in the case of limited shipments, industrial silicon will be maintained as a necessary procurement. Overall, the inventory of industrial silicon industry remains high, with slow turnover and continued price suppression. However, the geopolitical disturbance in the Middle East has pushed up raw material costs, providing bottom support for industrial silicon. As of March 16th, the closing price of the main futures contract Si2605 is 8605 yuan/ton, and the spot price of 421 # metallic silicon is quoted at 9700-10000 yuan/ton. It is expected that the industrial silicon market will continue to operate weakly and steadily in the short term.
In terms of operating rate: Some individual factories still focus on delivering early-stage orders, with an overall operating rate of around 68%; Due to insufficient domestic demand and poor new order transactions in the current market, in order to avoid inventory hoarding, some devices will continue to operate at a reduced load in the next two weeks.
On the demand side: Due to sufficient pre-sale orders in the early stage, most downstream enterprises still focus on digesting inventory, and their willingness to chase high prices and stock up is low this week. And the performance of the terminal consumer market remains flat, with limited transmission of upward momentum, resulting in pressure on the profits of small and medium-sized manufacturers and hindered stocking pace. In terms of exports, as the April tax refund cancellation date approaches, related enterprise orders have gradually come to an end, and the market is gradually returning to essential procurement, which has a bearish impact on the organic silicon market. It is expected that downstream enterprises will continue their on-demand procurement strategy and maintain a cautious attitude towards overall stocking.
Overall, the current silicone market is caught in a tug of war between cost support and weak demand. Raw material prices remain high due to external disturbances, providing bottom support for the market. However, terminal consumption remains flat, leading to cautious purchasing in the middle and lower reaches, with new orders mainly consisting of small orders for essential needs. In addition, considering the upcoming adjustment of tax refund policies and frequent external disturbances, it will have a significant impact on some export-oriented enterprises. It is expected that the stalemate game between upstream and downstream may continue in the short term, and the market will continue to operate steadily.