Entering Tuesday, the intention to raise prices in the silicone market is intertwined with game pressure. The DMC price is uniformly quoted at 14000 yuan/ton according to last week's meeting decision, while the spot exchange price of Shandong monomer factory is 100 yuan lower, at 13900 yuan/ton, showing an overall stable price trend. But the middle and lower reaches have always had doubts about its actual implementation effect. The new order transactions are sluggish.
On the demand side, the situation of insufficient terminal consumption power has not been reversed. Middle and downstream enterprises are adopting a wait-and-see attitude towards this series of price stabilization strategies, only maintaining the replenishment of essential small orders, and have no intention of participating in hoarding games. Especially in the early stage, low-priced inventory has yet to be digested, coupled with weak confidence in the future market, and midstream traders lack the willingness to chase higher prices. The entire demand side shows a characteristic of "passive acceptance and active avoidance".
Overall, the core contradiction between supply and demand at present is that the upstream relies on reducing production to try to rebuild pricing power, while the downstream uses low inventory strategies and delayed procurement to hedge against price pressures. This mismatch between "supply contraction expectations" and "real demand contraction" hinders the price transmission mechanism. The market is forming a delicate balance: if the price goes up, the transaction cannot keep up; The production reduction has been announced, but trust has not yet been established. In the short term, the silicone market may be stuck in a state of "strong quotes and weak transactions".
Industrial silicon: On the supply side, the northern region has relatively stable production, while the southwestern region has entered a period of abundant water. In July, electricity prices were further reduced, and enterprises continued to resume production. The overall inventory is showing a cumulative trend, and silicon companies are under great pressure to ship. On the demand side, the polycrystalline silicon market maintains a weak operation with a slight decline in prices, maintaining a demand driven pace for industrial silicon procurement without reducing price pressure, resulting in limited demand pull. In terms of organosilicon, monomer factories continue to implement production reduction plans, resulting in low industry operating rates and a corresponding contraction in demand for industrial silicon. Overall, the supply-demand imbalance in the industrial silicon market has not substantially improved, and the short-term market continues to fluctuate at a low level. As of July 6th, the closing price of the main futures contract Si2609 was 8390 yuan/ton; The quotation for 421 # metal silicon is 9300-9750 yuan/ton.
In terms of operating rate: Currently, the load of individual plant equipment is generally reduced, with an industry average operating rate of about 60%. The decline is particularly significant in North China, Shandong, and Jiangsu Zhejiang regions. Last week's industry conference finalized a new round of production reduction targets to advance to 60%, coupled with the July maintenance of large factories in Northwest China, the operating rate may further decline, and the supply side will significantly tighten.
On the demand side: Currently, it is the off-season for downstream consumption, and there are limited new orders from upstream and midstream enterprises. The purchasing side only replenishes inventory in small quantities according to daily production needs, with no intention of increasing the level of standing inventory. Although the upstream has released signals of production reduction and price increase, the bearish sentiment in the market has not completely subsided due to weak terminal orders and the continued consumption of self owned inventory. Most companies are still cautious in stocking up, and it is difficult to make bulk purchases, resulting in overall trading remaining flat. With the substantial manifestation of the production reduction effect and the approaching of the traditional peak season in September, it is expected that downstream demand for replenishment will gradually be released, but the substantial recovery of the market still depends on the improvement of terminal consumption. Overall, with the support of cost stabilization and production reduction expectations, the price of organic silicon is currently stable, but the upward potential is firmly suppressed by weak demand. The key to breaking the deadlock in the future lies in whether the actual reduction in production can match the shrinking demand in the off-season, and whether the traditional peak season can unexpectedly rebound - if the two resonate, it is possible to break the deadlock; If any link fails, the market is likely to return to a bearish game. It is expected that prices will remain stable and transactions will be deadlocked this week.