In the new month, the silicone market has entered a game stage between supply expectations and weak demand. Specifically, individual factories have voluntarily given up high quotes and balanced price differences, and their strategy has shifted from price boosting Poly to exchanging price for quantity and actively reducing inventory. As the deployment of reducing emissions by 40% from June to August gradually begins, the supply side is showing a contraction trend, which will provide bottom support for prices and help stabilize market expectations. At present, the DMC quotation is between 14800-15000 yuan/ton, and the transaction is between 14300-14500 yuan/ton. In terms of demand, under a series of upstream price protection measures, the bottom signal of prices tends to be clear, coupled with the expectation of reduced raw material production, some mid to downstream enterprises have begun to tentatively build warehouses. However, during the off-season, terminal consumption is weak and there is significant resistance to the downward transmission of goods. To avoid the risk of accumulating inventory, most companies still maintain a cautious and wait-and-see attitude, with procurement mainly focused on regular stocking and small-scale bargain hunting, and large-scale hoarding behavior has not yet been initiated. Overall, in the stalemate between strong cost support and weak rigid demand, the market will enter a stable price digestion stage at the beginning of the month, and the probability of a significant price drop is low. But the real stabilization and rebound depend on whether the implementation of the June production cuts can be sustained and whether there are new demand stimulus signals. It is expected that the silicone market will maintain a weak balance in the short term.
Industrial silicon: On the supply side, due to the impact of the wet season, some silicon plants in the north and south regions have resumed production one after another, especially in the southwest region where it is expected to open 5-8 more units this week. The expected increase in supply will gradually be realized. On the demand side, in terms of polysilicon, although top companies have plans to resume production in June, the demand for industrial silicon from external sources is relatively limited; In terms of organosilicon, monomer factories will increase their production reduction efforts by 40%, and the demand for industrial silicon procurement is also relatively weak. Overall, in the situation of high inventory and weak demand, the industrial silicon market maintains a weak and volatile operation. As of June 1st, the closing price of the main futures contract Si2609 was 8745 yuan/ton; The quotation for 421 # metal silicon is 9400-10000 yuan/ton. We need to focus on the progress of silicon plant resumption and policy changes in the future. In terms of operating rate: Recently, although some maintenance facilities have resumed operation, some facilities in Shandong, East China, and North China are still in a state of load reduction or maintenance. It is expected that the overall operating rate will remain at around 70%. At the beginning of the month, there was a demand for replenishment from downstream enterprises, and the current shipment pressure of individual factories is still acceptable. Subsequently, individual factories may carry out load reduction maintenance to promote the 40% emission reduction plan, and there is an expectation of further tightening on the supply side.
On the demand side: Currently, although the upstream production reduction has boosted market sentiment in the short term and triggered some downstream demand replenishment, the cost reduction is limited. The prices of 107 rubber and raw rubber continue to invert with it, resulting in hindered cost transmission. Under the situation of limited profits, the middle and lower reaches lack the motivation to stock up, and the willingness to chase high prices is insufficient. Short term orders are still mainly based on demand. In the future, the procurement of midstream and downstream enterprises will continue to follow the short-term demand rhythm, and the overall market lacks proactive replenishment momentum. Overall, there is a lack of substantial recovery in terminal demand, and the market lacks upward driving force. It is expected that the short-term trend will continue to be dominated by weak fluctuations. If individual factories gradually fulfill their production reduction expectations in the future, or if downstream consumption shows significant improvement signals, the price of organic silicon is expected to stabilize and rebound.