Entering the middle and late stages, the supply-demand imbalance in the silicone market continues to deepen, and DMC prices have fallen to a critical cost range. The recovery of market confidence still requires clear signals. From the perspective of the market, the overall load of the industry has dropped to about 60%. However, with the significant drop in prices testing the determination of enterprises to reduce production, some individual factories may turn to increasing load to dilute fixed costs under the pressure of losses, thereby intensifying the bidding game. At present, the transaction price of DMC has fallen to 12200-12500 yuan/ton, and some large orders have even dropped to 12000 yuan/ton. The price is at a low level this year, approaching the cash cost line of some individual factories. Therefore, although the expectation of supply contraction has increased, there is still a time lag from willingness to execution, and the release of speculative demand in the middle and lower reaches also appears cautious.
In terms of demand, midstream and downstream enterprises also have relatively light orders, and their production capacity is also insufficient. The procurement department adopts a strategy of following up on dips and building warehouses in batches. The price difference of 300-500 yuan/ton between large and small orders has intensified the market stratification game. Based on the actual transaction price of DMC, various enterprises continue to upgrade their pressure on 107 rubber and raw rubber. At present, there is a fierce game between supply and demand, and the willingness of the middle and lower reaches to seize the opportunity to buy at the bottom has begun to emerge. Some companies have clearly stated that they will increase their inventory when the price further approaches cash costs. Referring to the low trend in July and August last year, the current price has gradually approached psychological expectations, and the stocking wave may land in intense negotiations in recent days.
107 glue and silicone oil market: This week, the silicone oil market experienced a substantial rebound, with individual factories lowering their prices. 107 glue was quoted at 13000-14000 yuan/ton, a decrease of 700 yuan/ton from last week; Silicone oil is reported at 15000-15500 yuan/ton, a decrease of 800 yuan/ton from last week. On the supply side, the DMC bulk transaction price has dropped to 12000 yuan/ton, and the cost support has temporarily failed. The risk of losses for individual factories has increased, and the previous production reduction bottoming out effect has basically collapsed. In addition, the "price for volume" policy has intensified the downward pressure. At present, there is a risk of accelerated decline in the price of 107 rubber on the market. It is understood that the transaction price of 107 rubber in some enterprises has fallen below 13000 yuan/ton. Silicone oil enterprises have been dragged down by high priced raw material inventory in the early stage, and there is a great pressure to follow the decline. Some may face the risk of losses caused by the shrinkage of inventory value.
On the demand side: Under the guidance of DMC low prices, silicone rubber companies have further lowered their psychological prices for 107 glue and silicone oil, and inquiries have been continuously lowering prices. Due to the tight funding chain of silicone adhesive enterprises and the simultaneous pressure on finished product prices, there is a risk of further decline in operating rates, and it is difficult to form effective support on the demand side in the short term. Overall, in the short term, 107 glue and silicone oil are facing substantial supply and demand pressures to make up for the decline.
Cracking material silicone oil market: This week, the price of cracking material silicone oil remained at 12800-13500 yuan/ton, but in reality, due to the collapse of new material prices, the profit margin of enterprises has rapidly expanded. However, downstream enterprises have not concentrated on purchasing due to low prices, and generally hold pessimistic expectations for the future trend. They only maintain productive and essential needs, and batch orders continue to be delayed. The pressure on inquiry prices has not decreased, and the focus of actual orders is tilting towards the lower edge of the range.
In addition, recently Zaoyang Chemical Industrial Park announced that it will promote transformation and optimization work by classification, and most of the cracking material enterprises will be shut down. If this shutdown is fully implemented, it will significantly shrink the supply side of cracking materials. The supply gap caused by the suspension of customs clearance is difficult to realize as price support in the short term.
In the short term, the bottom of the cracking material silicone oil has not been compacted yet, and there is still a slight downward space in the quotation. Before the substantial recovery of terminal demand, the news of shutdown has limited boosting effect on prices, and the cracking material market is expected to maintain weak operation. We will pay attention to the actual execution pace of shutdown and downstream replenishment signals in the future.
In terms of waste silicone gel, currently the loss area of cracking material enterprises is expanding, and the purchase of waste silicone gel is being maintained at a maximum price. Only small orders for essential needs are being replenished, and some devices are actively reducing their load to reduce burr consumption. Recyclers are caught in a dilemma of "actual losses when shipping, and accumulation of inventory when holding goods". The pace of material collection has slowed down, and sporadic transactions are mostly small concessions in exchange. Currently, the price of raw materials for cracking is between 3300-3400 yuan/ton (excluding tax), and there is still room for 100-200 concessions in reality. Short term demand for waste silicone is unlikely to increase, and prices still face downward pressure to break through, continuing the weak consolidation pattern.