Maintain stability after rising! Last week, there was a strong atmosphere of rising prices, and the middle and lower reaches actively entered the market to stock up. However, most companies did not have strong confidence in increasing the price. Therefore, as we entered this week, the market chasing atmosphere has subsided. Yesterday, some individual factories in Shandong rose slightly by 100 yuan, with DMC quotes at 13300 yuan/ton, while other individual factories remained stable at 13500 yuan/ton to follow suit. The main large factories remained firm at 13900 yuan/ton.
In terms of demand, the phased replenishment of inventory in the middle and lower reaches is still ongoing, but most companies have completed regular stocking and their enthusiasm for chasing up prices and hoarding is not high, or they may return to purchasing for essential needs. This week, with the support of pre-sale orders, individual factories are expected to raise prices until the end of August. As the metal silicon continues to decline, the profits of individual factories gradually recover. It is not ruled out that some companies may secretly offer discounts to promote new transactions. Therefore, August is basically worry free, and whether they can unanimously raise prices to "Golden September" remains to be tested.
Cost side: On the supply side, although some silicon plants have reduced production and shut down, it is still a drop in the bucket compared to the overall large base, and the supply side will maintain a loose situation in the short term. In terms of demand, polycrystalline silicon enterprises generally suffer severe losses and continue to significantly reduce production, resulting in weak demand for industrial silicon. In terms of organic silicon, the price rebound has not led to a significant improvement in market demand, and the purchase volume of industrial silicon is limited.
Overall, the imbalance between supply and demand in the industrial silicon market continues, with a continuous accumulation of spot inventory, leading to a sustained decline in prices. As of August 12th, the spot price of 421 # metallic silicon is quoted at 12000-12700 yuan/ton, a decrease of 50-100 yuan from last week; The futures contract price of Si2411 was reported at 9630 yuan/ton, down 365 yuan. In the short term, driven by the sentiment of the market breaking 10000 yuan, it may lead to further pressure on spot prices.
In terms of operating rate: Currently, there are not many maintenance plans for individual factories. With the improvement of pre received orders, most individual factories maintain their current operating level, with an overall operating rate of over 70%. However, it should be noted that some midstream and downstream enterprises are more resistant to price increases in supply and have low willingness to stock up. Individual factories need to be vigilant about the potential resurgence of supply side pressure in the future.
On the demand side: Prior to the upstream price increase, many midstream and downstream enterprises had to replenish their inventory. However, as individual factories officially implemented the price increase, silicone oil factories, as the main force in purchasing DMC, showed caution in chasing the price increase. However, some major silicone oil factories, stimulated by the rise, also increased their order volume, which helped to boost DMC prices by occasionally stocking up in small quantities. In the future, it will be seen whether the expectation of a "golden September and silver October" on the demand side can be fulfilled. From the recent market situation, macro positive news has never stopped, but the implementation of orders is indeed limited, leading to downstream operations still being conservative. It is expected that the market will mainly maintain stable operation in the short term, and the market will continue to engage in essential trading.