According to Bloomberg on the 6th, Saudi Arabia will significantly lower the price of crude oil to Asian customers in order to enhance market competitiveness, due to the impact of navigation through the Strait of Hormuz and a surge in global crude oil supply. According to reports, Saudi Arabian oil company Saudi Aramco has lowered the official selling price of Arab light crude oil delivered to Asian customers in August by $11 per barrel, a discount of $1.50 from the regional benchmark price. The report pointed out that Saudi Arabia's price reduction this time set a record high since 2000, far exceeding market expectations.
Observation of the silicone oil market on Wednesday (July 8th): The game is intensifying, trading is deadlocked, and the silicone oil market is under short-term weak stability pressure
Entering Wednesday, the intensity of the upstream and downstream game in the domestic silicone market has only increased. After the initial price adjustment, the listing price of individual factories has returned to the guidance price range, but the market response has been quite cold. As of July 7th, DMC mainstream offers range from 13900 to 15000 yuan/ton, 107 rubber water purification offers range from 14300 to 14800 yuan/ton, and raw rubber mainstream offers range from 14800 to 15000 yuan/ton. From the feedback from the demand side, downstream companies have shown obvious resistance to the current offer, with low actual purchasing willingness and a deep tug of war between buyers and sellers, resulting in a basic stagnation of on-site trading activities and extremely limited actual trading volume. The biggest divergence point in the market now lies in the expectation of individual manufacturers actively reducing production to maintain prices, and the reality that downstream demand is not feasible. These two forces are pulling each other, and the transmission of upstream costs and quotations to downstream is encountering obvious resistance, resulting in a stage blockage in the price transmission chain.
Looking ahead to the next few days, multiple individual factories will gradually announce their official selling prices. In the fierce competition of oversupply and limited buyers, individual factories may further optimize transaction prices in order to win orders; But if the available supply in the market further shrinks due to maintenance or production restrictions, it is not ruled out that individual factories may raise their offers in advance, and the market trend is full of variables.
Focusing on the silicone oil market, the overall trend is mainly focused on stable price operation, and the trading performance on the market is flat and orderly, with no major fluctuations yet. It is worth noting that multiple silicone oil factories have reported tight production of functional high-end silicone oil, sufficient orders, and firm prices, becoming one of the few bright spots in the current market. As of July 7th, the mainstream long-term orders in the market are reported at 15500-16300 yuan/ton, while foreign brand holders such as Dow, Shinetsu, and Wacker are reported at 18000-19000 yuan/ton. Holders in the Jiangsu and Zhejiang regions continue to lower their shipments by 500 yuan/ton, while spot scattered small orders are flexibly adjusted according to actual orders, and one-on-one negotiations have become the norm.
On the cost side, the price of silicone ether continues to fall, with spot prices dropping to 33500-34500 yuan/ton. The high cost pressure in the early stage has been released, theoretically weakening the price support for silicone oil. However, it is understood that currently most silicone oil factories are still digesting the inventory of silicone ether purchased at high prices in the early stage, and the actual production cost reduction is limited, and they have not benefited synchronously from the decline in raw material prices.
In terms of shipping strategy, market differentiation is evident. Single unit factories adopt a "quantity pricing" strategy for silicone oil, shipping at low prices in exchange for liquidity; However, small and medium-sized silicone oil enterprises are under the dual pressure of insufficient follow-up of new orders and weak terminal demand, resulting in a decline in operating rates, slow accumulation of inventory, and a relatively fragile market balance. Overall, the demand support for silicone oil market is clearly insufficient, and enterprise shipments continue to be under pressure. Coupled with high production costs, many small and medium-sized silicone oil factories in Zhejiang and Jiangxi regions have chosen to shut down or reduce production, and the industry operating rate remains at a medium low level.
Based on comprehensive judgment, the short-term silicone oil market may mainly operate weakly and steadily, and the actual transaction price will continue to follow a flexible mode of single negotiation. The upstream and downstream game has not yet shown a breakthrough signal, and the market is waiting for new variables to break the current deadlock.