Collective outbreak! Yesterday, the organic silicon sector rose strongly. As of the close, both Hesheng Silicon Industry and Xin'an Shares rose by the daily limit of 10.01%, Kangda New Materials rose by the daily limit of 9.99%, and Dongyue Silicon Materials rose by 9.36%. In terms of driving factors, AI servers have led to a surge in demand for silicon carbide, coupled with collaborative production control and price repair in the organic silicon industry, resulting in a significant improvement in leading profits and prompting a collective outbreak in the sector.
Looking back at the market, upstream individual factories are orderly advancing their production reduction plans and slowing down the pace of new orders, prioritizing the digestion of inventory and previous pre-sale orders, maintaining firm offers, and the actual transaction focus has shifted upward compared to the previous period. In terms of demand, midstream and downstream enterprises are affected by the off-season of terminal consumption, resulting in slow destocking and an unfavorable order situation; In the situation of meager profits, there is a lack of motivation for raw material procurement, and enterprises generally look too much and act too little. They only replenish inventory in small batches when the price signal is clear, and their willingness to add additional orders in the future is limited. Overall, in the stalemate between supply side production cuts and demand side off-season suppression, it is expected that prices will continue to narrow in mid June. If the implementation of production cuts exceeds expectations, or if the market releases stronger signals to support prices, it is expected to drive tentative price follow-up; On the contrary, if inventory pressure forces individual factories to secretly reduce their inventory, market sentiment will weaken again. Overall, under the tug of war between supply and demand, the short-term silicone market may maintain a weak balance.
Raw rubber market: This week's raw rubber quotation is 15500-15800 yuan/ton. Supply side: As individual factories gradually tighten their production capacity, the supply of raw rubber for external sales is also tightening, and the delivery cycle of leading factories is longer. Most other enterprises mainly focus on delivering early-stage orders. Overall, the pressure on raw rubber shipments is not high, and the bullish sentiment has increased.
In terms of demand, downstream rubber mixing enterprises are currently affected by flat orders for terminal and silicon products, resulting in slow shipments and cautious procurement. But with the continuous consumption of inventory in the early stage, the raw material inventory of some enterprises has dropped to a safe level. In order to ensure the continuous operation of the production line, small batch procurement of essential needs has to be carried out. At present, rubber mixing enterprises have shifted from being bearish to choosing opportunities to replenish inventory. However, due to low profits, they still maintain price cutting procurement for raw rubber, and transactions are mainly small orders.
Overall, the bottom support of costs is clear, while downstream demand follows cautiously, and the overall raw rubber market tends to operate steadily. If the upstream production reduction effect further becomes apparent, the tightening pressure of raw rubber supply will prompt more rubber mixing enterprises to enter the market for procurement, and bulk orders are expected to be released gradually, with a high probability of a slight shift in price focus.
Rubber mixing market: The price of rubber mixing this week remains at 14500-14800 yuan/ton. In terms of procurement: Due to the incomplete consumption of raw material inventory in the early stage and the increasing pressure of self fund recovery, the willingness of rubber mixing enterprises to stock up is not high. In the case of limited profits, enterprise procurement is generally dominated by small orders for essential needs, and the replenishment cycle is relatively short. Some companies even choose to proactively reduce their burden to alleviate procurement pressure, and their stocking strategies tend to be cautious and conservative. In terms of shipments: Currently, traditional summer orders at the terminal remain stable, but the growth rate of export orders has slowed down, resulting in some companies extending their payment terms. Under the pressure of repayment, rubber mixing enterprises prioritize rapid monetization as their primary goal; At the same time, in order to avoid the risk of accumulating inventory, some companies would rather offer small discounts than accelerate capital flow, resulting in slow profit recovery. Overall, with strong costs and average demand, the rubber mixing market has reached a stalemate in transactions, and the actual transaction focus has shifted downwards, putting sustained pressure on corporate profits. If there are no significant positive market stimuli in the future and downstream willingness to follow suit is still insufficient, some companies with tight capital chains may actively increase their efforts to reduce burdens and offer discounts in exchange for orders. It is expected that there will be no short-term price fluctuations and weak stable operation will be maintained.
High temperature adhesive demand side: Recently, summer product orders have been relatively concentrated, but the overall increase in new orders is limited, and the driving effect on the market situation is average. Most silicon product companies have shown mediocre performance in accepting orders, with no significant increase in volume, and their mentality tends to be cautious. Moreover, due to the continuous squeezing of raw material costs, the profit margin of silicon product enterprises is limited, and their willingness to purchase mixed rubber is relatively low, with obvious pressure on prices. It is expected that in the short term, silicon product companies will continue to focus on essential procurement and price suppression, in order to control inventory and avoid financial risks, making it difficult for the market to see a centralized stocking situation. Overall, with the active contraction support from the supply side, the bottom of the organic silicon market is gradually consolidating. Despite being in the traditional off-season, downstream demand replenishment has gradually started, coupled with inventory digestion, and market sentiment has rebounded. In the short term, the expectation of tight supply is increasing, cost transmission is gradually emerging, and the price of organic silicon is expected to stabilize and strengthen.