Support for silicone market at low levels strengthens; tariff reductions in trade war benefit some end-use products [SMM Silicone Weekly Review]

SMM May 15 News:

Costs: This week, the average price of #421 silicon (used in silicone) in east China was 11,000 yuan/mt, maintaining stability compared to last week. The average price of #421 silicon in east China was 10,000 yuan/mt, dropping by 50 yuan/mt WoW. Domestic silicon metal producers' quotations remained largely stable this week. In the futures market, there has been strong support at the bottom recently, narrowing the spread between futures and spot prices. Additionally, some downstream enterprises plan to enter the market for procurement in the near term, leading to overall fluctuating prices for silicon metal. The price of monochlorosilane dropped slightly this week, with local transaction prices in east China falling below 2,000 yuan/mt. The comprehensive cost decreased WoW, and the profits of monomer enterprises slightly increased.

DMC: This week, domestic DMC quotations ranged from 11,300 to 11,600 yuan/mt, with the average price slightly decreasing WoW, and the transaction range narrowing. This week, the opening quotation for DMC on the online mall of a monomer enterprise in Shandong was 11,300 yuan/mt, a decrease of 200 yuan/mt WoW. The DMC quotation of a leading enterprise was 14,800 yuan/mt, remaining unchanged for the time being. This week, other domestic monomer enterprises quoted DMC at 11,500-11,600 yuan/mt. The transaction range in the domestic DMC market narrowed this week, and monomer enterprises' quotations remained largely stable. Although some downstream enterprises entered the market for procurement, and demand was boosted by the partial cancellation of tariffs in the trade war, monomer enterprises currently still have relatively high inventory levels. Their primary goal remains destocking, so prices are expected to fluctuate at lows in the near term.

Silicone Oil: The dimethyl silicone oil market continued to operate in the doldrums this week. In terms of prices, market quotations ranged from 14,000 to 14,500 yuan/mt, with some room for negotiation in actual transactions. In terms of costs, the DMC market price remained stable at 11,300-11,600 yuan/mt this week, providing some support for dimethyl silicone oil prices. In terms of demand, adjustments in the Sino-US tariff policy have boosted downstream terminals' confidence in the market outlook. However, the market has not yet fully reflected signals of significant demand growth, and overall demand still needs to be further improved. Therefore, downstream enterprises remain cautious in procurement, mostly making just-in-time procurement. In the short term, the dimethyl silicone oil market is expected to continue operating in the doldrums.

107 Silicone Rubber: The 107 silicone rubber market continued to operate weakly this week. In terms of prices, market quotations ranged from 11,800 to 12,700 yuan/mt, with an average decrease of 200 yuan/mt this week, and some room for negotiation in actual transactions. In terms of supply, although there have been maintenance or load reductions at facilities in regions such as east China and north China recently, with the overall operating rate remaining low, new order transactions are still under pressure, resulting in significant inventory pressure for producers. In terms of demand, the easing of the Sino-US tariff policy has theoretically led to a gradual recovery in shipments for end-users trading with the US, boosting downstream enterprises' confidence in stockpiling. However, the feedback on terminal orders in the market still needs to be strengthened, so many enterprises are adopting a wait-and-see attitude, and overall demand remains weak. In the short term, there has been no significant improvement in the consumption cycle of downstream raw materials, and the overall supply and demand remain unbalanced.

MVQ: This week, the price of silicone MVQ ranged from 12,800 to 13,500 yuan/mt, with an average price of 13,150 yuan/mt, and the price remained stable this week. This week, some tariffs in the Sino-US trade war were canceled domestically, which greatly benefited the end-use demand for MVQ. Domestic end-users began to enter the market for procurement this week. It is expected that the demand for MVQ will be effectively boosted within the window period, and the price will remain stable in the short term, with a focus on destocking through price concessions. Subsequently, as trading volume picks up, the price of MVQ is expected to increase slightly.