Amidst the sluggish A-share market yesterday, the organic silicon sector surged against the trend like the brightest star in the night sky. Yuanxiang New Materials opened slightly lower and fell slightly, with a vertical 20% limit up in just about 5 minutes; Morning Light New Materials also opened at a low price and then rose vertically to the limit in just about 4 minutes; The New Asia Strong opened high and quickly hit the limit up, closing for the third consecutive day. Runhe Materials, Hongbai New Materials, Luxi Chemical, and Sibao Technology have all followed suit.
Last weekend, Yuanxiang New Materials stated on the investor interaction platform that its products are used in the fields of silicone rubber, PE battery separators, insulation materials, matting agents, defoamers, and toothpaste. In the first quarter of 2024, the company's operating revenue increased by 22.51% year-on-year, and the overall sales of its products are currently in good condition.
New Asia Strong also stated on the investor interaction platform that the company's recent production capacity utilization rate has been stable, with some products being produced at full capacity. The company's production and operation are normal, and the trend of the secondary market is influenced by multiple factors. The company attaches great importance to market value management and will continue to strengthen its main business to promote the increase of company value and better return to shareholders.
Returning to the market trend of organic silicon, some individual monomer factories in Shandong Province bid for 13400 yuan/ton twice yesterday, once again launching a small drop in shipment layout. As expected, today's quotation returned to 13500 yuan/ton, and other monomer factories also habitually increased their prices. Although the main large factories still hold firm at 13900 yuan/ton, which makes everyone hesitant to fall easily, their mentality of causing trouble remains unchanged, and the transaction negotiations are still orderly and the market transactions are mainly focused on low prices. And now, the off-season of terminal consumption is difficult to change. With the entire industry chain suffering losses, downstream enterprises continue to follow the procurement route of bargain hunting. Both upstream and downstream enterprises are not easy to take significant actions, and under observation, both import and export are relatively conservative.
In short, in the absence of obvious positive market support, it is difficult for any enterprise to have absolute competitiveness, and the market game is still deadlocked. Currently, the mainstream DMC quotation is 13500-13900 yuan/ton, and we are waiting for the main large factories to expand their bidding in the future!
Cost side: On the supply side, due to the southwest production area entering a transitional period of abundant water, the water and electricity prices in Sichuan have decreased, the cost support for silicon prices has weakened, and the number of furnaces for resuming production in the southwest production area has increased. In addition, large factories in the northwest have maintained high production levels, and the loose supply pattern has not changed. On the demand side, due to the ramp up of production capacity, the procurement of industrial silicon has rebounded in the polycrystalline silicon sector. However, the demand for organic silicon is average, resulting in a continuous accumulation of industrial silicon inventory, forcing prices to decline and approaching the cost of the wet season. The market is still bearish.
As of July 8th, the quotation for raw material chemical grade 421 # metallic silicon is 13000-13900 yuan/ton, with a partial decrease of 100 yuan. The spot si2409 contract price is reported at 11245 yuan/ton, with a decrease of 70 yuan; In addition, there is currently no quotation for chloroform in Shandong region. Objectively speaking, the downward trend of industrial silicon is still controllable, and there is still some support for cost in the face of DMC prices.
In terms of operating rate: As time progresses, there has been a slight increase in the maintenance of individual plant equipment. However, with the operating rate remaining stable at over 70% for a long time, a slight reduction in production cannot change the pattern of oversupply in the DMC market. In the future, the survival space of enterprises with high costs will still be compressed, or individual plants may increase their production and start early maintenance.