In mid July, the organic silicon market continued to grind to a bottom in the tug of war between "price reduction and volume exchange" and "production reduction and price stabilization". Yesterday, some individual factories in Shandong quoted a price of 13000 yuan/ton for DMC and D4, with a price reduction of 900 yuan/ton. The actual transaction price of DMC further dropped to 12500-12600 yuan/ton, indicating an improvement in low price transactions. In the short term, there may be limited room for deep decline.
But the real pain point in the market is not how much prices have fallen, but the sustained weakness of orders from small and medium-sized manufacturers, and the depth of supply-demand imbalance far exceeding industry expectations. Therefore, people's pessimistic expectations for the future are still deepening, and the pressure on individual factories is escalating, forcing upstream companies to further give up profits. Although the previous meeting clearly stated a 60% reduction plan, there are practical constraints on implementation: the reduction will directly push up fixed costs per ton, and in the context of difficult price rebound, the willingness and strength of individual factories to actually reduce production will be tested. After the loosening of the pricing system, whether the consensus on centralized emission reduction can be maintained at a high level of consistency has become the biggest variable in the current market.
On the demand side, orders from midstream and downstream enterprises are generally light, and price reductions have limited impact on driving terminal demand. Therefore, the core of the current market lies in the release rhythm of speculative demand, which depends on two conditions: first, whether the price is close to the "bottom price" in the industry, and second, whether large players have clearly entered the market and there are obvious stabilizing actions in the upstream. These are key factors supporting the restoration of market confidence.
Raw rubber market: Currently, the mainstream price for raw rubber is 14000-14500 yuan/ton, which is 300-800 tons lower than last week. Supply side: With the continuous bottoming out of DMC prices, the foundation for the high-level operation of raw rubber has been disrupted. The situation of having a price but no market in the early stage has further deteriorated this week, with actual transaction prices falling to 13500-14000 yuan/ton, and new orders still being mainly for essential needs, with no concentrated increase in volume observed. At present, leading factories are still mainly engaged in raw rubber trading and actively negotiating with various rubber mixing manufacturers; Other individual factories have started to offer discounts to core customers, and the decline is often followed up with reference to the price adjustment rhythm of leading factories. At present, the impact on the supply side of raw rubber not only comes from the pressure of inventory accumulation, but also from the continuous loosening of the industry's psychological defense line. The lower the price, the more vague the market's judgment of the bottom. On the demand side, downstream rubber mixing enterprises continue to bear the dual pressure of raw materials and finished products. Although inventory is at a low level, facing the irrational and wide price difference between raw rubber and DMC, procurement has shifted from "replenishing inventory on demand" to "extreme price suppression". If the decline in raw rubber is not as significant as DMC, they would rather reduce production than accept orders. At the same time, enterprises with rubber production lines are using low-priced DMC to produce rubber themselves, seizing orders with cost advantages and exacerbating internal differentiation in the industry;
Overall, the core contradiction in the current market is concentrated in the pace of concessions by leading factories. If it actively follows up on the decline of DMC and narrows the price difference between raw rubber and DMC to within a thousand yuan, the previously accumulated speculative demand downstream is expected to be released in batches, injecting temporary vitality into the market; On the contrary, if the high quotation is maintained, transactions will mainly focus on small quantities of essential demand, and downstream wait-and-see sentiment will not decrease, further prolonging the destocking cycle. It is expected that the raw rubber market will continue its downward trend this week, and the true direction of the market will depend on the outcome of the game between the discount rate of leading factories and the downstream willingness to undertake.
Rubber mixing market: Currently, the mainstream price for rubber mixing is 13000-13500 yuan/ton, with a downward focus on transactions. In terms of procurement, due to the relatively high price of raw rubber, rubber mixing enterprises are forced to compress their raw material inventory to the extreme low, and the procurement rhythm has shifted from routine replenishment to follow-up on dips. After the further decline in raw rubber prices yesterday, some companies have started to replenish their inventory for essential needs, but large orders are still under close negotiation. The rubber mixing plant is trying to exert pressure on the raw rubber based on the DMC decline, while individual factories are still holding on to 13500 yuan/ton of raw rubber. The game between the two sides is still ongoing. Currently, rubber mixing enterprises are under the dual pressure of cost and demand, with extremely limited profit margins.
In terms of shipments, downstream silicon product companies have used payment terms to strengthen their bargaining power, resulting in a compression of profits for rubber mixing enterprises and a significant decrease in cash flow turnover efficiency. Combined with the decline in exports and fluctuations in shipping costs, the sustainability of downstream orders is doubly disrupted. In order to maintain market share, rubber mixing enterprises are forced to repeatedly weigh between payment terms and prices, and small and medium-sized manufacturers are beginning to consider phased production cuts to alleviate order pressure. However, the overall operating rate of the industry has limited decline, existing production capacity continues to be released, and new order transactions are sluggish.
Overall, the bottom of the mixed rubber price is rigidly supported by the cost side. If the price difference between raw rubber and DMC is repaired, or if a round of replenishment pulses is triggered, the trading activity may briefly increase. However, the actual digestion capacity of the terminal is limited, and the market is likely to return to a flat state. In the medium to long term, the reshuffling of the rubber mixing industry is accelerating, and only enterprises that simultaneously focus on cost control and product differentiation can overcome the cycle.