The impact of supply side production cuts on DMC prices is multifaceted. Firstly, reducing production directly reduces market circulation, leading to a tense supply-demand relationship. In a situation where demand is relatively stable, a decrease in supply will push up market prices. Secondly, reducing production also leads to a weakening of economies of scale, which in turn increases marginal production costs. As costs rise, companies often choose to increase their selling prices in order to maintain profitability.

In addition, supply side production cuts have also formed a cost driven price increase mechanism. When market prices rise due to reduced production, this upward trend itself will further stimulate companies to reduce supply, thereby exacerbating the pressure of price increases. This self reinforcing mechanism leads to a ladder like upward trend in DMC prices in the short term.