In the new week, the organic silicon market continues the supply-demand game pattern. At present, after the individual factory meeting, the motivation to raise prices has significantly increased, and the previous situation of low price competition has been effectively alleviated; As of the time of writing, the DMC transaction price has rebounded to 14300-14800 yuan/ton, and the overall average price has rebounded by about 200 yuan/ton from last week's low point. However, the actual transaction of high priced new orders still needs to be tested. If the 40% reduction plan can be fully implemented in the future, the supply will be substantially reduced, providing more stable support for prices. In terms of transactions, due to the decrease in covert bidding behavior by individual factories and the gradual digestion of supply contraction expectations by the market, the bearish sentiment of middle and downstream enterprises has eased, and some essential inventory replenishment has been moderately carried out. However, due to the traditional off-season of terminal consumption, most midstream and downstream enterprises have insufficient orders and remain highly cautious in raw material procurement, mainly focusing on small orders and buying at low prices. Actual transactions are still weak, making it difficult to form a large-scale stocking wave.
Overall, the current reduction in production by upstream individual factories provides bottom support for prices, but downstream observation and pressure on prices, as well as the hidden accumulation pressure of individual factories, have led to a weak equilibrium pattern in the market. It is expected that the silicone market will continue to be deadlocked in the short term. If the expected production cuts continue to materialize and downstream suppliers replenish their inventory after clear signals of price stabilization, the market may usher in a temporary rebound and repair window.
Industrial silicon: On the supply side, the southwest region is gradually entering a period of abundant water, and most silicon factories have shown a willingness to resume production, resulting in an overall relaxed supply situation. On the demand side, in terms of polycrystalline silicon, recent regulatory measures have been proposed under the guise of "anti-monopoly" to rectify the anti involution of polycrystalline silicon and promote the reduction of production capacity. At the same time, the production of silicon wafers rebounded in June, resulting in an overall increase in demand; In terms of organosilicon, monomer factories have set a clear goal of reducing production by 40% through joint production, and currently there is limited demand for industrial silicon procurement. Overall, the fundamentals of industrial silicon are still in a pattern of oversupply and slow turnover, making it difficult for prices to have upward support. As of June 8th, the closing price of the main futures contract Si2609 was 8660 yuan/ton; The quotation for 421 # metal silicon is 9400-10000 yuan/ton. It is expected that the industrial silicon market will continue to operate weakly and fluctuate in the short term. In terms of operating rate: With most individual factories maintaining load reduction operations, the current operating rate remains at around 68%. In the future, individual factories will generally reduce production and burden to promote the implementation of the 40% production reduction plan. It is expected that the operating rate will significantly decrease in late June, and the supply side will show a tightening trend.
On the demand side: Currently, individual factories have clearly expressed their expectation of tightening supply and released signals of price bottom. Some mid to downstream enterprises that did not stock up at the beginning of the month may gradually make essential purchases. At the same time, as the supply side increases its production reduction efforts, the bearish sentiment in the market gradually eases. Mid to downstream enterprises are expected to initiate phased essential stocking actions, and the possibility of market stabilization or even a slight rebound is gradually increasing. However, due to the impact of the off-season of terminal consumption, midstream and downstream enterprises are still under significant pressure, with a cautious purchasing mentality, and most enterprises have limited willingness to replenish their inventory that still needs to be digested. Overall transactions remain flat. Overall, the reduction of production by upstream individual factories will gradually alleviate supply pressure, and market bearish sentiment will continue to improve. Subsequently, with the digestion of inventory and steady release of essential demand, the expectation of replenishing inventory in the middle and lower reaches is gradually increasing, and the bottom support of organic silicon is gradually strengthening. It is expected that the price of organic silicon will stabilize in the short term; If the production reduction is implemented as planned, there is a possibility of a moderate rebound in the latter half of the year.