Supply and demand tug of war! At present, the industry's collaborative production reduction has entered the substantive implementation stage. As individual factories gradually increase their production reduction efforts, the overall operating rate has dropped to around 65%. According to our understanding, a single factory in North China plans to shut down for maintenance until July this week, and spot circulation will further tighten. At present, under the expectation of supply contraction, the upward trend in prices among individual factories has not wavered, and the bottom support is relatively stable.
However, the contraction effect of supply has not been smoothly transmitted to the trading surface. Affected by the weak terminal consumer market, the current middle and downstream enterprises have limited new orders, weak stocking sentiment, and most enterprises are in a stalemate of poor shipment. Therefore, they tend to be conservative in raw material procurement, mainly focusing on short cycle and small batch procurement. Overall, the current supply side continues to contract to support prices, but the limited increase in demand has suppressed the upward repair space of prices, and the overall market is in a bottom sawing state. It is expected that the price of organic silicon will maintain weak stability in the short term, with limited fluctuations.
Raw rubber market: This week's raw rubber quotation is 15500-15800 yuan/ton, with a transaction price of 15000-15500 yuan/ton. Supply side: Currently, the operating rate of individual factories continues to reduce emissions, and leading factories plan to further reduce their burden in July. The pressure of accumulating raw rubber inventory is still controllable, but the shipping pace this week is noticeably slower and the mentality is also more differentiated. Overall, leading factories have maintained stable shipments recently, and the focus of market fundamentals still exists.
In terms of demand, due to terminal constraints, downstream rubber mixing enterprises mainly ship scattered urgent orders, with limited procurement demand for raw rubber, generally maintaining a safety stock of about 20 days. Especially after the early delivery of orders gradually came to an end, the lack of timely follow-up on new orders resulted in some rubber mixing enterprises accumulating inventory and a decrease in procurement volume. In addition, the slow recovery of terminal payments has exacerbated the tight financial situation of enterprises. Recently, some rubber mixing enterprises have still lowered prices during inquiries, and the market has fallen into a stalemate in transactions.
Overall, the current contraction of upstream supply and weak downstream procurement are mutually constraining each other, resulting in a lack of upward driving factors for raw rubber prices. Positive market signals have not yet emerged, and it is expected that short-term transaction prices will continue to be around the current price range, and the market will continue to operate steadily.
The mixed rubber market: Currently, the mainstream quotation for mixed rubber remains stable at 14300-14800 yuan/ton. In terms of procurement: Due to the incomplete digestion of raw material inventory in the early stage and the increasing pressure of self fund recovery, the willingness of rubber mixing enterprises to proactively stock up is low. At the same time, the market generally adopts a wait-and-see attitude towards the future trend, so companies are not in a hurry to build a large number of warehouses. They adopt a multidimensional procurement model that is ready to purchase and use, and the pace of replenishing inventory is relatively cautious. In terms of shipments: Recently, the demand for small household appliances, daily consumer goods and other fields has continued to rebound, which has formed a certain positive trend for silicon product companies' shipments. However, the growth rate of terminal consumer orders and exports has slowed down, and silicon product companies still mainly accept small orders, resulting in a continuous narrowing of profit margins. This has led to a synchronous slowdown in the procurement pace of rubber compounds and frequent price inquiries. In this context, the difficulty of receiving payments from rubber mixing enterprises has increased. In order to accelerate capital turnover, small concessions are being made during actual order negotiations. In the future, if there is no substantial improvement in terminal orders, some rubber mixing enterprises with high shipping pressure may continue to trade price for quantity.