Individual Enterprises Jointly Stand Firm on Quotes, DMC Prices Surge by 800 Yuan/mt [SMM Analysis]

SMM, February 12: This week, silicone monomer enterprises rapidly raised their DMC quotations, with mainstream enterprises adjusting their quotes to around 13,500 yuan/mt. However, the upward shift in transaction price center fell short of expectations. Some downstream enterprises remained cautious and have not fully entered the market for restocking. Additionally, the pre-ordered inventory held by downstream enterprises has not been fully released, and raw materials remain relatively sufficient. As a result, transactions were mainly facilitated through small batches and spot orders.

Figure: Price Trend of Silicone Products

This week, domestic monomer enterprises rapidly raised their DMC quotations. Monomer enterprises in Shandong quoted 13,400 yuan/mt this week, an increase of 800 yuan/mt, while other monomer enterprises generally raised their quotes to 13,500 yuan/mt. Leading enterprises, however, have not yet adjusted their DMC quotations. According to SMM, actual transaction prices have not significantly increased. The main reasons are, on the one hand, downstream enterprises have not fully resumed operations, leading to limited consumption demand for DMC products. On the other hand, most downstream enterprises had finalised pre-orders with monomer enterprises before the holiday, and these pre-orders have not been fully consumed. Consequently, downstream enterprises have limited willingness to purchase raw materials. Although transaction prices have risen due to panic buying by some downstream enterprises, they have not yet fully reached the quoted price levels.

Regarding this price increase, SMM analyzed that after the holiday, two domestic monomer enterprises entered a cold repair phase, leading to a reduction in supply. Additionally, the traditional peak season of March and April is expected to bring strong demand for silicone products. With supply and demand jointly driving the market, price increases have become inevitable. However, considering the current fundamentals, SMM believes the extent of the increase is limited. Traditional peak season demand orders were largely placed before the holiday, and demand in both traditional and emerging sectors has not fully recovered. Overall market consumption remains below the level of the same period last year. Therefore, based on fundamentals, the price increase has already reached its upper limit. However, sentiment-driven factors need to be closely monitored, especially if suppliers jointly stand firm on quotes to support the market. In such a scenario, the subsequent DMC price increase may exceed the expectations of downstream enterprises.

For future price forecasts, SMM expects quotations to continue rising, but the increase in transaction prices is likely to be limited. Close attention should be paid to recent downstream transaction activities in the market. In the short term, the transaction price center for DMC is expected to rise to around 13,200 yuan/mt.