China's automobile sales remained weak in June, with a year-on-year decline of 20.2% in passenger car retail sales in the first half of the year. This indicates that after years of rapid expansion, market demand has been suppressed and is beginning to cool down. The China Passenger Car Association announced on Wednesday that retail sales of passenger cars in June decreased by 23.2% year-on-year to 1.6 million units. Last month's sales increased by 6.1% compared to May. China exported 877000 passenger cars in June, with exports of new energy vehicles more than doubling.
Friday (July 10th) Organic Silicon Market Observation: Supply and demand stalemate continues, price bottoming trend remains unchanged
As of this Friday, the overall operation of the domestic organic silicon market has been stable, with most individual companies continuing to offer at previous prices, and there has been no significant fluctuation in the mainstream transaction range. However, from the actual transaction structure of DMC, the price differentiation between core large and small customers still exists, and the negotiation focus of large customers remains around 13000-13200 yuan/ton (12XXX yuan/ton), reflecting that the current market is in a typical supply-demand tug of war stage, with insufficient directional breakthrough momentum.
Supply side: Production cuts and price increases continue to advance, but inventory pressure is gradually becoming apparent
On the supply side, the industry coordination meeting within the week reiterated the willingness to raise prices and clarified that the production reduction will gradually increase to 60%. The current comprehensive operating rate of the industry has been compressed to about 60%. The strengthening of this production reduction expectation has provided some psychological support for individual factory quotations in the short term, and the external quotations of enterprises have generally remained firm. However, there are still hidden concerns at the practical implementation level - the follow-up of new orders has slowed down significantly in the past two weeks, and the reduction effect brought by the reduction of equipment load has not fully offset the impact of weak demand, resulting in the gradual accumulation of finished product inventory in production enterprises and marginal increase in shipping pressure for some manufacturers. This pattern of "reducing production to boost prices" and "accumulating inventory pressure" coexists, which weakens the positive support effect of the supply side on prices.
The demand side performance is even weaker. At present, it is the off-season for traditional consumption, and downstream industries such as aerospace, electronics and electrical, construction, transportation, chemical, textile, food, light industry, medical, etc. have low production rates, leading to a cautious attitude towards raw material procurement. Most downstream enterprises are currently in a proactive destocking cycle, with a low willingness to stock up on raw materials. They only maintain the minimum safe stock of essential goods, and bulk warehousing and speculative restocking behaviors have almost disappeared. From the perspective of market trading atmosphere, buyers have limited recognition of the current quotation level, a strong mentality of price suppression, and actual transactions are mostly negotiated. Overall, the demand side lacks elastic support, making it difficult to effectively drive prices.
Based on the analysis of both supply and demand sides, the current silicone market is in a two-way squeeze of "cost support" and "demand suppression". On the one hand, the high price of metal silicon on the raw material side provides some bottom support for DMC prices on the cost side; On the other hand, the pressure of demand contraction during the off-season continues to release, coupled with intensified destocking behavior in the middle and lower reaches of the industrial chain, resulting in relatively loose spot liquidity and a lack of realistic driving force for price increases
In the short term, it is expected that the market will continue to operate in a stable and weakening trend. If the implementation of industry production cuts in the future falls short of expectations, or if the signal of demand recovery is delayed, the market is likely to continue the bearish pattern of "clear stability and hidden decline", and there is a possibility of further slight downward shift in the actual transaction center. At the operational level, it is recommended that enterprises with urgent procurement needs can choose to replenish their inventory in batches during price adjustments and lock in low-cost sources of goods; However, for speculative stocking aimed at gaining a rebound in the market, caution should still be maintained, and decisions should be made only after there are substantial improvement signals in the supply and demand fundamentals. The opportunity for the market to break through may wait until the end of the third quarter when the traditional peak season demand starts to resonate with production cuts and reductions, and then it is expected to break the current deadlock.