Market research firm Counterpoint Research announced on Monday that the global smartphone market is experiencing its worst annual contraction in history due to the worsening shortage of memory chips. It is expected that shipments will plummet 13.9% this year to 1.08 billion units. This forecast has been further lowered from the expected 12.4% decline in February. In the first quarter of this year, global wholesale prices of smartphones increased by 14%, while shipments decreased by 3.1% year-on-year. As the inventory before the supply crisis gradually runs out, this trend may continue, and some models priced below $150 may completely exit the market.
Wednesday (June 3rd) Organic Silicon Market Observation: Further Expansion! 107 glue and DMC are becoming increasingly inverted, resulting in a stalemate and loose steering
Sources have revealed that there has been significant progress in the merger of two major silicone rubber factories in Shandong and Zhejiang, which entered the substantive negotiation stage this week, including the acquisition price and how to unify the brand. Entering Wednesday, the silicone market is undergoing a subtle shift from a "stalemate" to a "loosening". As of June 2nd, although the DMC price is still reported at 14800-15100 yuan/ton, the core large-scale transaction price is around 14300 yuan/ton. The quotation for 107 rubber purified water remains at 14800-15100 yuan/ton, while the quotation for raw rubber is 15500-15800 yuan/ton. But under the calm price dial, the trend force has begun to take effect - the dual suppression of high costs and weak demand is pushing the market towards a direction of choice after the "dilemma of ups and downs".
From raising prices to offering discounts: The trend of corporate strategy has shifted: Previously, individual factories generally adhered to the Poly strategy of raising prices, but as pre-sale orders gradually decreased and inventory pressure increased, manufacturers' willingness to accept orders has significantly increased. The industry inversion caused by high comprehensive costs is no longer sustainable, and the corporate strategy has shifted from "price driven Poly" to "exchanging price for quantity and actively reducing inventory". This trend shift is directly reflected in the pricing behavior: actively giving up high quotes and flattening price differences have become common choices, and the market pricing focus is quietly shifting downwards.
Exacerbating inversion: The price difference trend between 107 rubber and DMC is reversing: A more significant trend signal is that the inversion between 107 rubber and DMC is intensifying. As of June 2nd, the mainstream price of 107 glue is 14800-15100 yuan/ton, and the transaction price of core large players has dropped to 14300-14500 yuan/ton, with the price difference from DMC turning negative and the gap widening. This means that 107 glue, as the core raw material of downstream silicone glue, is rapidly weakening its price support, and the downstream resistance to high prices and the increase in bargaining power have become irreversible trends.
Trend differentiation between supply and demand: Supply contraction vs. deepening off-season demand: Supply side trend: Due to insufficient orders, manufacturers' production enthusiasm continues to be low, and overall operating rates continue to decline. The expected 40% reduction in emissions from June to August has become a certainty, and the supply side is showing a clear trend of contraction. At the same time, the production of 107 glue enterprises is low, and the factory has limited external spot resources; Although the port inventory has slightly rebounded, the source of goods is concentrated and controlled, and the import of tradable spot goods is still tight, making it difficult to form a large-scale supply on the spot side. Supply contraction will provide bottom support for prices, but it will be difficult to drive upward.
Trend on the demand side: As we enter the traditional off-season of June, downstream silicone adhesive, photovoltaic adhesive, and electronic adhesive factories are maintaining low load production, and their willingness to stock up on raw materials continues to weaken. On demand small order procurement has become the mainstream mode, and new orders are scarce. Buyers are driven by the mentality of "buying up, not buying down", with a strong bearish sentiment, and their willingness to enter the market for large-scale purchases and inquiries remains low. The support from the demand side is showing a downward trend.
Trading and Expectations: The wait-and-see sentiment deepens, and the weak stable pattern continues: Overall trading is light, with traders reporting weak and stable trading, but there is generally room for negotiation in actual transactions. Terminals and distributors are becoming increasingly cautious in purchasing goods, and the high priced source of 107 glue is being blocked from transactions, with bargaining following the market. The market expectation has shifted from 'looking for stability' to 'bearish', with a strong wait-and-see atmosphere.
In the short term, it is difficult to substantially improve during the off-season of demand, and the expectation of a 40% reduction in emissions from June to August on the supply side will form a bottom line below. The price lacks both upward momentum and difficulty in falling deeply. It is expected that the price of 107 glue will continue to operate in a weak stable pattern in the near future, but there is a slight downward trend in the trading center. The real turning point depends on waiting for the signal of demand recovery after the off-season and the degree of realization of supply side production reduction. Prior to this, 'price for quantity' will still be the main trend in market operation.