As New Round of Expectations for Silicone Price Hike Released, Downstream Enterprises at Various Stages Entered the Market for On-Demand Procurement [SMM Silicone Weekly Review]

SMM, May 7:

Cost: On May 7, the average price of #421 silicon (used in silicone) in east China was 9,550 yuan/mt, stable WoW, while the average price of #421 silicon in east China was 9,400 yuan/mt, up 100 yuan/mt WoW. After the holiday, silicon metal futures prices rose sharply, and spot quotations followed suit, with fewer low-priced cargoes in the market and the transaction center shifting upward. Methyl chloride prices remained stable WoW, with market prices at around 3,200 yuan/mt. The comprehensive production costs of silicone monomer enterprises edged up WoW.

DMC: This week, the transaction center of China's silicone DMC market remained stable, with the mainstream transaction range at 14,700-15,000 yuan/mt. Regional quotations continued to diverge, with monomer enterprises in Shandong maintaining quotations at 14,700 yuan/mt, while mainstream quotations in other regions were 15,000-15,200 yuan/mt. Post-holiday market transactions were mainly driven by rigid demand, with mid- and downstream enterprises that had not purchased before the holiday entering the market to restock on an as-needed basis. Currently, some upstream producers have pre-sold and scheduled orders through month-end of May, and producers maintained a firm willingness to hold prices firm. Combined with the approaching industry conference in May, overall bullish sentiment in the market strengthened, also driving downstream procurement. In terms of supply, China's monthly DMC production schedule in May edged up about 8% MoM, but overall industry operating rates remained at relatively low levels. Additionally, supported by a relatively strong cost side and relatively sufficient pre-sold orders, in the short term, China's silicone DMC market prices are expected to continue a firm upward trend.

Silicone oil: This week, the market price of silicone dimethyl silicone oil at regular viscosity was 16,000-16,400 yuan/mt, with an average price of 16,200 yuan/mt, flat WoW. Demand side, most downstream enterprises had completed phased restocking before the holiday. However, as end-use demand improved at a mild pace and the upward transmission cycle was relatively long, downstream procurement sentiment remained generally cautious, with limited willingness to rush to buy amid continuous price rise at high prices. If export orders from outside China are gradually released going forward, coupled with continued digestion of downstream inventory, this is expected to effectively improve acceptance of high silicone oil prices.

107 silicone rubber: This week, the market transaction price range for silicone 107 silicone rubber at regular viscosity was quoted at 14,800-15,200 yuan/mt, with an average price of 15,000 yuan/mt. Currently, most downstream enterprises had restocked on an as-needed basis before the holiday, and post-holiday market transactions were still mainly driven by rigid demand follow-through, with the overall procurement pace remaining slow. At present, upstream monomer enterprises have scheduled orders through month-end, but influenced by the release of expectations for upstream raw material price hikes, cost support remained strong. In the short term, 107 silicone rubber prices are expected to trend firm in line with costs, but new orders at high prices will tend to be cautious after downstream enterprises have completed phased restocking.

MVQ: This week, the MVQ price range was approximately 15,300-15,700 yuan/mt, with an average price of 15,500 yuan/mt, running stable. Demand side, stimulated by overall market expectations for price hike, some downstream top-tier enterprises had completed their basic restocking at the beginning of the month after the holiday, while small and medium-sized downstream enterprises entered the market for procurement as needed based on their own production schedules, with overall demand released steadily. Supply side, upstream producers were primarily focused on delivering pre-sold orders, and overall supply remained controllable.