On June 10th, the National Development and Reform Commission announced that it will continue to increase investment support for urban renewal during the 15th Five Year Plan period, and coordinate the promotion of "hard investment" and "soft construction". This year, the central budget will allocate 97 billion yuan for investment, benefiting approximately 8 million households; Simultaneously allocate 160 billion yuan in "dual" construction funds, an increase of 25 billion yuan year-on-year. Hard investment "prioritizes supporting livelihood projects such as the renovation of old residential areas and dangerous old houses, while" soft construction "focuses on improving investment and operation mechanisms, promoting the formation of a diversified and sustainable long-term mechanism. The industry believes that this is beneficial for the silicone adhesive market.
Wednesday (June 10th) Organic Silicon Market Observation: Differentiation and Game, 107 Adhesive Market Enters Stable Price Consolidation Period
Yesterday, the organic silicon sector saw a strong upward trend, with multiple stocks hitting the limit up or experiencing significant gains. As of the close, Hesheng Silicon Industry rose by the limit up, closing at 39.33 yuan (+10.01%); Xin'an shares hit the daily limit up, closing at 14.94 yuan (+10.01%); Dongyue Silicon Materials reported a revenue of 17.65 yuan (+9.36%); Xingfa Group reported a revenue of 28.66 yuan (+5.14%). Entering Wednesday, the stock market for the Dragon Boat Festival holiday is nearing its end. Looking back at recent market performance, the current organic silicon market shows a significant structural differentiation trend. With the effective containment of the previously disorderly and vicious competition at low prices, the industry is gradually abandoning internal competition and returning to a rational and orderly development track.
The trigger for this market shift came from the industry conference held last Friday. Two key signals were released at the meeting: one is to strengthen environmental measures to reduce emissions by 40%, and the other is to emphasize maintaining price stability. As a result, the volume of inquiries in the market has significantly increased, and although there is still a wait-and-see sentiment in the market, the bearish expectations have eased. As of June 9th, the quotations for major products have become clearer - the mainstream DMC offers are in the range of 14700-15100 yuan/ton, and there is room for core large players to make concessions in transactions; The quotation for 107 glue water purification is concentrated between 14800-15000 yuan/ton, and there is also a policy of concession for core large customers; The mainstream price for raw rubber is 15500-15800 yuan/ton, while dimethyl silicone oil remains stable at 16200-16800 yuan/ton. However, the actual transaction prices in the spot market have slightly fallen, and many merchants holding goods tend to postpone shipments and maintain a wait-and-see attitude.
From the perspective of manufacturer behavior, the current market presents a clear "polarization" feature. A single factory with unfulfilled orders and low inventory pressure still maintains a firm attitude towards quotation. However, the actual trading volume in high priced areas is relatively scarce, and downstream willingness to undertake is insufficient. For individual factories with insufficient order reserves and rising inventory pressure, they choose to negotiate lower prices to win orders, and some downstream customers also take the opportunity to purchase low-priced essential goods. Overall, due to a significant reduction in covert bidding between 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 urgent stock replenishment actions have been moderately carried out.
At present, many individual factories in various regions are conducting routine maintenance, and the overall market inventory is at a low level. Considering the ongoing impact of maintenance and emission reduction policies, it is expected that the market supply will further tighten in the future. However, the demand side has entered the traditional off-season of consumption, with low operating rates of downstream facilities and a generally cautious and wait-and-see attitude towards procurement. The strong cost support from upstream and weak demand from downstream during the off-season have formed a clear game pattern at present. Overall, it is expected that the mainstream market prices will remain stable in the short term, with little possibility of significant fluctuations.
Focusing on the 107 glue market itself, the trend is basically consistent with the overall market, but the details are more abundant. The current 107 rubber market maintains a stable and upward trend, with mainstream quotes for long orders ranging from 14800 to 15100 yuan/ton, and actual transaction prices for major players ranging from 14300 to 14500 yuan/ton. Compared to the previous chaotic and disorderly pricing state, the current price range has clearly converged. Spot scattered small orders can flexibly change according to the actual order situation, and bargaining space still exists.
From the supply side, the current industry operating rate remains at around 69.5%, and the overall market supply of goods is abundant, without any shortage situation. From the demand side, downstream enterprises in major application fields such as silicone adhesive, photovoltaic adhesive, and electronic adhesive generally implement on-demand replenishment strategies, with low procurement enthusiasm and a relatively weak overall trading atmosphere. Whether it is a long or individual order, there is generally room for negotiation in the actual transaction process, and the buyer still holds a certain degree of negotiation initiative.
Overall, the biggest change in the 107 glue market is the return to a unified pricing system. Previously, disorderly bidding behavior between different manufacturers and channels has been effectively curbed, which has a positive impact on stabilizing market expectations. But it should also be noted that the substantial recovery of downstream demand still needs to wait for the start of a new round of replenishment cycle after the end of the terminal off-season. Prior to this, the game pattern between the supply side's willingness to stabilize prices and the demand side's bearish expectations will continue. In the short term, the 107 rubber market is likely to continue to show a stalemate of "stable prices, weak transactions, and bargaining power", and all parties are waiting for clearer directional signals.