Upstream silicone enterprises continue to sell at competitive prices, intensifying mid- and downstream clients' further bearish expectations [SMM Silicone Weekly Review]

SMM, July 2 –

Cost: On July 2, the average price of #421 silicon (used in silicone) in east China stood at 9,550 yuan/mt, down 50 yuan/mt WoW, while the average price of #421 silicon in east China was 9,400 yuan/mt, flat WoW. This week, silicon metal prices faced downward pressure and weakened due to expectations of mounting supply pressure and weak fundamentals. Methyl chloride price remained flat WoW, with a market average of around 2,600 yuan/mt. The comprehensive production cost of silicone monomer enterprises edged down slightly WoW, easing the overall cost pressure accordingly.

DMC: This week, China’s silicone DMC transaction prices breached support again, plunging sharply to a range of 12,800–13,000 yuan/mt, with an average of 12,900 yuan/mt, down 1,100 yuan/mt WoW. On the demand side, strong bearish expectations prevailed, and midstream and downstream purchasing sentiment diverged. Rigid-demand clients bought in small, split batches to proactively control inventory and avoid cost losses from continued price declines, while clients with upstream inventory backing remained on the sidelines. Overall, with no signs of improvement in end-use demand, there was no willingness for concentrated restocking. On the supply side, DMC production in June fell 11.27% MoM, with an industry operating rate of about 64%. Many units remained offline for maintenance, and the monomer facility operating rate is expected to hit a periodic low in early July. However, supply may still expand once maintenance ends and units resume. With a new round of industry meetings approaching, upstream monomer enterprises broadly offered price concessions to move goods, intensifying market competition. In the short term, the weak DMC trend is unlikely to change. Attention should remain on the outcome of industry meetings and changes in downstream restocking sentiment.

Silicone oil: This week, the price of conventional-viscosity dimethyl silicone oil moved lower, with transaction prices at 15,700–16,200 yuan/mt, average 15,950 yuan/mt, down 150 yuan/mt WoW. Raw material DMC prices continued to fall, significantly weakening cost support, coupled with sluggish demand during the traditional off-season. Downstream buyers only made small restocking purchases for rigid demand, with strong pressure to push for lower prices, leaving market trading thin. On the supply side, enterprises faced inventory pressure and intensified shipment competition. Under a weak supply-demand dynamic, prices lacked support. In the short term, constrained by both supply and demand, the silicone oil market is expected to trend weaker with consolidation.

107 silicone rubber: This week, the price of conventional-viscosity 107 silicone rubber also plunged sharply, with transaction prices at 13,300–13,800 yuan/mt, average 13,550 yuan/mt, down 800 yuan/mt WoW. Continued declines in raw material prices weakened cost support, and end-use demand remained sluggish during the off-season. Downstream silicone sealant enterprises, hampered by high costs and slow sales, showed strong wait-and-see sentiment and low purchase willingness, mainly making only small rigid-demand orders.

MVQ: This week, the MVQ market remained in a weak stalemate, with transaction prices at 14,500–15,000 yuan/mt, average 14,750 yuan/mt. However, with DMC prices continuing to fall, cost support was insufficient. Downstream rubber compounders’ bearish expectations intensified, and purchase willingness was low. Some only made small follow-up rigid-demand purchases after top-tier players adjusted prices last week. Overall, trading was sluggish. Therefore, in the short term, MVQ prices still face further downward risks.