In the new week, the competition in the silicone market has intensified. From the on-site perspective, the situation of midstream and downstream enterprises destocking is average, and more enterprises are still operating under pressure. Even if leading manufacturers voluntarily offer discounts on 107 rubber and raw rubber, it is difficult to effectively stimulate downstream enterprises to stock up or even hoard goods. At present, there is a strong cautious wait-and-see sentiment in the market, and most companies tend to wait for lower prices or wait for price signals to stabilize before considering entering the market to replenish inventory. Overall, market transactions continue to be cold.
This conservative attitude further exacerbates the differentiation of the upstream market. On the one hand, leading manufacturers continue to adopt a "price for quantity" strategy to stimulate shipments, resulting in significantly lower transaction prices for raw rubber and 107 rubber, and sustained price inversion; On the other hand, other individual factories have stable DMC quotations at 14800-15200 yuan/ton due to sufficient pre-sale orders and controllable inventory in the early stage. However, the follow-up of new orders has shown weakness, and the actual market transaction price has loosened to 14700-15000 yuan/ton.
In addition, as individual factories continue to reduce their load, the supply of by-products to the outside world continues to tighten. As far as we know, not only is the price of silicone ether consistently high, but the price of high hydrogen silicone oil has also been rising recently. Several high hydrogen silicone oils in Jiangxi and Zhejiang have risen to 18000-20000 yuan/ton, an increase of about 3000 yuan/ton from the beginning of the month.
In the short term, as most individual factories complete their pre order deliveries, shipping pressure is increasing. If leading factories continue to offer discounts or some manufacturers turn from hidden to visible, it may trigger a new round of phased price reductions. At that time, the suppressed downstream demand for replenishment is expected to be released at a low price, driving a short-term rebound in trading volume. Currently, it is still mainly characterized by narrow range fluctuations.
Industrial silicon: On the supply side, Xinjiang's early maintenance equipment has resumed production, and production has rebounded. However, in southern and central China, due to high electricity prices, the willingness of enterprises to start production is low. In the southwest region, a few manufacturers may resume production at the end of the month, and overall changes are relatively limited. The loose supply side pattern remains unchanged. In terms of demand, the fundamentals of polycrystalline silicon are weak, and there are currently no substantial favorable policies in place. Organic silicon monomer factories are maintaining a stable operation with reduced load, resulting in weak demand for industrial silicon.
Overall, there has been no substantial improvement in the supply-demand imbalance in the industrial silicon market, with weak futures and spot prices. As of May 25th, the closing price of the main futures contract Si2609 was 8570 yuan/ton; The quotation for 421 # metal silicon is 9400-10000 yuan/ton.
In terms of operating rate: Currently, with the support of pre-sale orders, the operating rate of individual factories remains at a medium to high level, and the overall operating rate is around 70%. However, there is significant pressure to close new orders, and we need to focus on the industry's 35% emission reduction plan from June to August in the future. If the supply side continues to actively contract, it may have a certain bottoming effect on prices.
On the demand side: Currently, due to the impact of low-priced supply from individual enterprises, there is a strong bearish sentiment in the middle and lower reaches, and the procurement pace is generally slowing down. However, after continuous consumption in the early stage, the raw material inventory of most enterprises has gradually bottomed out, and the demand for rigid replenishment is accumulating. Due to the dual constraints of the average performance of traditional off-season terminal consumption and the significant decline in export data in April, it is expected that month end purchases will still be mainly based on on-demand small orders, making it difficult to achieve centralized volume expansion.
In addition, the price difference between the leading factory and the market has widened after the price adjustment, but the high threshold and delivery time limit have suppressed downstream inquiry volume, resulting in a stalemate in actual transactions. Overall, this week's supply-demand game will enter a white hot stage, and the downstream stocking pace will highly depend on the clarity of price signals. The overall market sentiment tends to be cautious and wait-and-see.
Looking ahead to the end of the month, upstream individual factories may offer moderate discounts to alleviate shipping pressure and stimulate new order transactions; And downstream enterprises, based on rigid demand, will seize the opportunity to replenish inventory at low prices after the price loosens. The combination of the two is expected to drive a temporary rebound in transactions and a slight increase in market activity.
In the medium term, if individual factories continue to implement the 35% emission reduction plan from June to August, the supply side will enter an active contraction trend, and the market profit margin is expected to gradually narrow. Prices are expected to return to a stable price operation track. It is recommended that businesses closely monitor the actual transaction pace of leading factories, the follow-up willingness of other individual factories, and the consistency of emission reduction policies, and flexibly adjust their procurement and inventory strategies.