June 30th News: According to the National Bureau of Statistics, from January to May, industrial enterprises above designated size in China achieved a total profit of 3143.96 billion yuan, a year-on-year increase of 18.8%. Industrial enterprises above designated size achieved a revenue of 56.55 trillion yuan, a year-on-year increase of 5.5%. At the end of May, the asset liability ratio of industrial enterprises above designated size was 58.2%, an increase of 0.3 percentage points year-on-year.
Observation of the Organic Silicon Market on Tuesday (June 30th): The sharp decline in DMC has driven down the entire range of raw rubber and mixed rubber, exacerbating the differentiation of terminal demand and market competition
Entering Tuesday, multiple individual factories' DMC offers fell sharply to 14000 yuan/ton today, driving down spot prices. At this point, the June market has come to an end - the actual transaction price for this month has begun to adjust, but fortunately, a significant drop has been achieved, with a total reduction of over 1000 yuan/ton throughout the month, and the actual transaction price of core large investors has fallen to 13500 yuan/ton. This caused a price surge of over 3000 yuan/ton in the first 8 months, and finally saw a significant drop in June. It is expected that after a significant drop in prices, downstream inquiries will be more active than before, and there will be a stronger willingness to replenish inventory at low prices. In terms of midstream and downstream, based on the current DMC transaction price falling to 13500 yuan/ton, some large orders can still be negotiated, and some companies have started to stock up urgently.
From a cost perspective, after the DMC price temporarily broke through and fell, the cost support for raw rubber and mixed rubber weakened synchronously. On the supply side, due to the continuous promotion of industry coordinated production reduction, the weekly average operating rate of organic silicon DMC has dropped to 65.51%, a decrease of 3.19% compared to the previous week. A single factory in North China has planned to shut down for maintenance until July this week, further tightening expectations for spot circulation. Under the shutdown and maintenance of multiple individual units, the overall operating rate is expected to further decline to around 60%.
In terms of raw rubber, the market is weak and stable, with a focus on consolidation at a low level. The recent decline in DMC raw material prices has weakened cost support, coupled with weak demand during the traditional off-season, downstream acceptance of previous price increases is insufficient, and the focus of raw rubber transactions continues to shift downwards. There is ample spot circulation on the supply side, and some raw rubber enterprises are under pressure from inventory, resulting in small discounts for shipments; The demand side rubber mixing plant is cautious in procurement and has obvious resistance to high prices, only maintaining the follow-up of essential needs, and the marginal ability to receive goods is weakened; The upstream raw materials on the cost side are fluctuating downwards, and the support is continuously weakening. As of June 29th, although the quotes from raw rubber factories have remained stable at 15500-15800 yuan/ton, the market transaction price of raw rubber has been continuously declining due to the continuous efforts of leading factories to exchange price for quantity. Currently, it has approached around 14500 yuan/ton. The combination of loose supply and demand and lower costs has led to a shift in market transactions towards the low-end, gradually entering a stage of weak stability and destocking.
In terms of rubber mixing: Currently, the mainstream price for conventional hardness rubber mixing is 13500-14000 yuan/ton. At present, there is abundant supply of spot inventory in China, and the pressure of inventory backlog in rubber compound manufacturers is prominent. Several rubber mixing factories in Dongguan are competing for orders with low-end models at low prices. As a result, the bargaining space in the entire rubber mixing market has been opened up, causing a somewhat chaotic trading atmosphere in the market. The overall production of downstream silicon products is relatively low, with only a small amount of additional orders being made according to demand. There is an increase in low-priced supply of mixed rubber in the market, and competition among peers is intensifying. Manufacturers lack confidence in raising prices, and the pace of shipments is significantly accelerating. The room for negotiation and profit sharing continues to expand. The cost side support and weak demand side form a hedging game, and it is expected that the short-term price of mixed rubber will continue to be weak and consolidate.
In terms of terminal silicone product consumption, the market shows a clear differentiation pattern. The demand for rubber and silicone products in traditional civilian scenarios accounts for about 55% of the overall market, with stable demand but small fluctuations. Emerging scenarios have become growth engines - demand growth in sports equipment, pet supplies, automotive interiors, smart wearables, and other fields continues to rise. It is worth noting that the silicone kitchenware market in North America has experienced explosive growth recently, with a heat-resistant silicone mat designed specifically for stoves setting an astonishing record of nearly 100000 sales per month in the North American market. According to Grand View Research, the global silicone cookware market sales have reached $3.169 billion by 2025 and are expected to increase to $4.708 billion by 2032. At the same time, the new domestic standard GB 4806.16-2025 for silicone rubber used in food contact has been officially implemented, and the European Union has also banned the sale of silicone products with excessive D4/D5/D6 content since June, significantly raising the environmental compliance threshold. However, under the overall weak terminal demand, the operating rates of the middle and lower reaches have synchronously decreased, and there is also a certain backlog of product inventory. Although some product categories have shown growth highlights, overall procurement remains focused on essential needs, and downstream companies are not willing to fully open up stocking and are still waiting for lower prices to enter at the right time. Traditional general-purpose products are steadily in high demand, while high-end functional, customized, and environmentally friendly products are growing rapidly.
Looking ahead to the future, the short-term market is expected to continue its weak and stable operation, with slight downward fluctuations. Under the support of reduced production and cost, the downward exploration space of raw rubber is limited, but there is a lack of demand driven upward trend; The local low price competition in rubber mixing is difficult to eliminate in the short term. The key to the later trend lies in whether the actual reduction in production in the upstream can effectively shrink supply, and whether further price drops can effectively trigger downstream centralized replenishment. It is recommended that the industry closely monitor the pricing strategies of leading manufacturers and changes in downstream orders, and carefully schedule production.