With the arrival of a new week, the silicone market has ushered in its first wave of growth at the beginning of the year. On site, organic silicon companies have started production and returned to the market one after another. Although the Shandong monomer factory gave a small discount last week, other monomer factories are firm in stabilizing the market and plan to reduce production to support prices. Yesterday, some individual factories temporarily did not provide quotes, and there was a strong atmosphere of waiting for price increases. In this situation, the purchasing enthusiasm of downstream enterprises has increased, and there has been a significant increase in low-priced orders from individual factories in Shandong. As of the time of writing, the DMC transaction price has slightly increased to 12600-1290 yuan/ton, and some manufacturers plan to place orders at 13000 yuan/ton, with an overall increase of about 200 yuan compared to before the holiday.

At present, downstream enterprises are actively stocking up on dips, but they are still cautious about chasing after price increases, as inventory is abundant and new orders need to be added after the holiday to boost their momentum. In the short term, there is still some resistance to implementing the first wave of growth at the beginning of the year. On the one hand, it depends on the production reduction and price protection determination of individual enterprises, and on the other hand, it also needs to pay attention to the recovery pace of terminal demand after the holiday. It is expected that DMC prices will show a stable and slightly rising trend this week.
On the cost side, on the supply side, due to the resumption of some production capacity by major factories in the northwest during the Spring Festival period, and several large silicon factories planning to increase production slightly in February, there is a slight upward trend in overall production capacity. In terms of demand, the price of polycrystalline silicon remained stable after the holiday, and market transactions tended to be flat. Organic silicon has not yet fully resumed downstream work, and there are currently no transactions in the market after the holiday. Market quotations are temporarily stable, and industrial silicon procurement is average. Overall, due to downstream demand drag, industrial silicon enterprises still face significant inventory pressure, and the supply side has seen some increase, exacerbating oversupply. Recently, futures have continued to fall, with the contract price of Si2503 closing at 10805 yuan/ton, while spot prices remain weak and stable. The price of 421 # metal silicon is expected to remain low and fluctuate.
In terms of operating rate, in February, several individual units in Jiangxi, Shandong, Hebei, and Hubei planned to shut down for maintenance, and the operating rate showed a downward trend. The pressure on the supply side is expected to be alleviated, and coupled with the comprehensive resumption of downstream production, the confidence of individual units in raising prices is expected to be strong.
On the demand side, downstream enterprises resumed work comprehensively this week, and some enterprises had to replenish their inventory in order to deliver overdue orders on time. The market transaction atmosphere has rebounded. Among them, in terms of room temperature adhesive, the construction industry has a general atmosphere, and the demand for silicone adhesive has limited boost. Therefore, silicone adhesive companies have low expectations for this year's "Golden Three Silver Four" and there are not many people who have stocked up in large quantities in advance; In terms of high-temperature adhesive, demand remains stable and upward, and silicon product companies are gradually expanding their layout for the traditional peak season. In addition, the solid to liquid forming process is still being continuously promoted; Organic silicone leather is also accelerating its expansion, with huge application prospects. Not only are terminal leather enterprises laying out, but many upstream organic silicone factories are also entering. From raw materials to finished products, under full competition, the pace of replacing traditional PVC and PU synthetic leather with organic silicone leather is constantly advancing, both in terms of cost and process. The production capacity of liquid silicone is expected to continue to grow.
Overall, the upstream market has released signals of price increases, and transactions still need to be tested. A new round of trade war between China and the United States has officially begun, and the current complex and volatile economic environment, coupled with a long-term sluggish market, has led everyone to have a bearish outlook and hope for an increase. It is expected that there will be more calls for price increases in the short term, but in reality, we will be cautious in chasing price increases and stocking up. We will pay more attention to the operating rate of individual factories and changes in the demand side market in the future.