DMC raw rubber has finally raised its price! The current average contract reference price of DMC has approached 13600 yuan/ton, which is still far below the average price of 14450 yuan/ton in the same period last year, and has accumulated a decline of over 20% this year. The continuous increase in production capacity and insufficient support on the demand side have led to a continuous downward shift in the focus of DMC price operation. Industry insiders believe that in the face of the new situation of the organic silicon market transitioning from a seller's market to a buyer's market, the "price for quantity" measures of major individual enterprises have become the trend, and it is expected that there is still room for further optimization of DMC prices. Downstream needs to focus on laying out advantageous products, and downstream organic silicon enterprises with advantages in the mid to high end market will benefit from the continuous implementation of "lying at parity" between supply and demand. The downstream demand side can protect profits through the fast in and fast out on-demand mode, improving product quality and brand reputation.
From January to March this year, the prosperity of the organic silicon industry increased, and DMC equivalence continued to rise. The average spot price of domestic DMC in the first quarter was 16950 yuan/ton, a year-on-year increase of 17%. The average spot price of domestic raw rubber is 18850 yuan/ton, a year-on-year increase of 23%. Six listed individual enterprises achieved profits in the first quarter, exceeding 80%; Multiple companies have sufficient orders and maintain a high level of capacity utilization. However, the good times did not last long. Starting from early April, the domestic spot DMC price fell to 13100 yuan/ton, approaching a new low in over a year. The latest online bidding data from multiple individual companies last week showed that the prices of major organic silicon categories fluctuated to varying degrees, generally not much, mostly between 100-200 yuan, with some imported organic silicon prices maintaining a slight rebound. Although the increase in imported silicone prices may have an impact on the supply and demand of the domestic silicone market, it is still difficult to solve the dilemma of temporary oversupply and sustained low prices of domestic silicone.
Organic silicon giants are expanding production again! Recently, individual enterprise expansion projects in Jiangxi, Hubei, Hebei, Shandong, Zhejiang and other regions are undergoing trial or construction. For many years, the production capacity of raw materials has increased instead of decreasing, and the overall profit of the industry is even thinner than that of paper... However, it is the traditional chemical industry of organic silicon that has received continuous news of expanding production capacity and trial production in the second quarter of this year. Why do we need to increase the sluggish organic silicon industry from Xingfa, Luxi, Sanyou, Dongyue, Xin'an to Aiken?
It is not difficult to see that this wave of capacity expansion is not expanding ordinary organic silicon raw materials, but rather expanding mid to high end downstream products. Behind this, there is still a play in the mid to high end downstream market. Since 2022, the low growth and low gross profit of the organic silicon industry have led to continuous price competition and internal competition among companies involved. Nowadays, the rapidly growing and high gross profit mid to high end downstream market has shown enterprises growth and hope. Especially in this "mid to high end game", Xin'an and Aiken have already received dividends. The latest financial reports of Xinan and Aiken show that the self use rate of raw materials is continuously increasing, enriching the downstream mid to high end product lineup, leading the trend of integrated development of upstream and downstream in the industry, and the proportion of downstream products continues to increase.
Seeing these data, it is not difficult to understand why multiple individual enterprises are simultaneously expanding production in the mid to high end downstream this year. Faced with this "hot cake", enterprises have made every effort to increase the proportion of brand and downstream products, enhance the company's product bargaining power, further optimize the company's product structure, and enhance the overall profitability of the company. It can even be said that the mid to high end downstream market is a strategic location. During the reshuffle period of the organic silicon industry, who can win the mid to high end downstream market may be able to dominate the future organic silicon industry. Improving production capacity layout, increasing enterprise economies of scale, and maintaining supply chain stability are the key steps in targeting the mid to high end.
Single unit device dynamics: Overall stable, with a domestic operating rate of around 70.3% during the trial production of new production capacity.
Normal operating devices: Dow, Xinyue, Wake, Hesheng, Luxi, Inner Mongolia Xingxing, Inner Mongolia Hengyecheng, and Yuntou
Load reduction devices: Zhejiang Zhongtian, Hebei Sanyou, Dongyue, Xin'an, Jiangxi Xinghuo, Hubei Xingfa
Metal silicon market: The domestic industrial silicon futures market rebounded strongly, with the main contract SI2409 rising 500 yuan to 13075 yuan/ton. The mainstream market price of 421 # metallic silicon fluctuates by 100-200 yuan/ton, at 13600-13950 yuan/ton. Single unit factories continue to have a strong demand, while top single unit factories are accelerating the construction of their own industrial silicon projects. Small and medium-sized single unit factories are sporadic competitors, and Yunnan silicon factories are starting to significantly reduce production.
DMC Market: The domestic DMC market prices are mainly stable, with local bids increasing by 100-150 yuan to 13400-13950 yuan/ton. Market transactions are still acceptable, with limited cost support. Some individual factories are starting to accumulate inventory, and the demand side is pessimistic about the future market, with small orders being the main focus of transactions.
Silicone oil market: The domestic silicone oil market is operating steadily, with a partial increase of 100-200 yuan. The raw material support is still acceptable. Anhui's top silicone oil brands are reporting at 16000+yuan/ton, cracking material silicone oil is reporting at 13000+yuan/ton, and Dow Xinyue Wacker silicone oil is reporting at 19500-21500 yuan/ton. The market has abundant spot supply, and downstream is following up on demand, resulting in weak and volatile market trends.
107 glue market: The domestic 107 glue market is stabilizing, with the Sanyou brand increasing by 100 yuan/ton. In addition, the suspected price increase from Xingfa Hesheng may also stimulate the replenishment operations of silicone glue factories on the demand side in the short term. Periodic price increases may help boost its performance. It is reported that mainstream market grades are priced at 13850-14800 yuan/ton. During the shutdown of cracking plants, the price of cracking 107 gum is reported at 13200-13500 yuan/ton, while the market focus of imported 107 gum remains stable at 15500-16500 yuan/ton.
Overseas giants on strike! The South Korean technology giant Samsung Electronics Union recently announced that it will launch its first ever strike on June 7th. The strike was triggered by salary issues, and the union's executive department has issued a policy to members to collectively take a day off on June 7th (which may be repeated). The Samsung Electronics Union has over 28000 employees, accounting for approximately 22% of all Samsung Electronics employees. If there is a collective strike, the impact will be significant. Samsung Electronics is a major consumer of organic silicon, which may affect some functional organic silicon product markets.