Recently, the organic silicon DMC market has continued to operate weakly, with local transaction prices falling below 12000! The actual transaction price continues to decline, approaching the cash cost line of some companies, and the pressure of industry losses continues to rise. On the supply side, although the industry conference in early July increased the production reduction to 60%, the actual implementation difficulty is relatively high. Currently, the overall operating load is around 61%, and the joint production reduction has not met expectations. At the same time, as some parking facilities are about to restart at the end of the month, the expectation of loose supply on the supply side is further strengthened. Some companies have weakened the substantial support of production cuts on prices by accelerating destocking and continuously reducing prices.
In terms of demand, the terminal market continues to be sluggish, with low production in traditional downstream areas, slow digestion of raw materials, and poor orders. Under this situation, midstream and downstream enterprises continue to lower their expectations for bargain hunting prices. After stocking up on essential goods, the pressure on large orders continues to escalate.
Overall, the market is still in the bottom grinding stage of "limited supply contraction and sustained weak demand", lacking substantial positive drivers in the short term, and prices are expected to continue to be under weak pressure. Despite continuous follow-up on large order negotiations, with the continuous decline of DMC and strong willingness to further lower prices in the middle and lower reaches, large-scale bottom fishing is still competing for lower prices.
At present, the game between supply and demand is fiercely underway: on the one hand, DMC has fallen below 12000. If prices continue to decline, there is no need for joint emissions reduction, and some high cost devices may be forced to reduce production. The supply side is expected to experience substantial contraction; On the other hand, midstream and downstream enterprises are cautious in stocking up, and raw material inventories are generally at a low level. With the recent continuous impact of low prices, many enterprises have already planned to buy at the bottom and are preparing for the traditional peak season. The buyer is waiting for a lower price to obtain a safety margin, while the seller is measuring the critical point of production reduction and loss. Both parties are waiting for the price that can break the balance.
So, how far do you think DMC is from hitting bottom after falling below 12000? At which price will 107 glue and raw glue fall again to truly trigger a bottom buying order? Welcome to leave your judgment in the comment section.
Industrial silicon: On the supply side, the resumption of production during the wet season in the southwest region has basically reached its peak, and there is limited room for further improvement; Some enterprises in Xinjiang have recently experienced temporary production fluctuations, with some companies shutting down for maintenance. It is expected to recover in the short term, and the overall supply level remains loose. On the demand side, the polysilicon market continues to face high inventory pressure, maintaining a strong demand for industrial silicon procurement; In terms of organosilicon, there is a shortage of new orders from monomer factories, leading to a continuous decline in prices and a simultaneous weakening of demand for industrial silicon.
Overall, the industrial silicon market is still in a stalemate with support at the bottom and suppressed upward momentum. As of July 20th: The closing price of the main futures contract Si2609 is 8270 yuan/ton; The quotation for 421 # metal silicon is 9200-9750 yuan/ton. It is expected that the short-term industrial silicon market will continue to fluctuate at the bottom.
In terms of operating rate: Currently, individual factories are still operating at a reduced load, with an industry operating rate of around 61%. Stimulated by the sustained low price strategy, market transactions have rebounded, and some parking facilities will resume operation by the end of the month. In addition, a 150000 ton plant in Shandong province that has been shut down for over three years is scheduled to restart in August, and we need to be vigilant about the shipping pressure caused by the supply recovery in the future.
On the demand side: Currently, there is a differentiation in the stocking mentality of the middle and lower reaches of the organic silicon industry. Some large customers have reached a psychological threshold due to low prices and have started exploratory buying to replenish inventory, which has activated demand; However, most traders and small and medium-sized enterprises are concerned about the risk of a second bottom, and the terminal market continues to be weak, so they are extremely cautious about buying at the bottom and mainly focus on buying at low prices for essential needs. In the short term, the current low-level replenishment lacks impact, and large-scale centralized stocking is still in a game.
Overall, the contradiction between the ineffective implementation of upstream production cuts and weak terminal demand is difficult to reconcile in the short term, with the demand side taking the initiative in the game. If the price drops further and touches the bottom line of individual enterprises' losses and the low psychological expectations of the middle and lower reaches, the suppressed speculative demand is expected to be concentrated and released, and the market will usher in a real bottoming out turning point.