DMC prices fell sharply in some regions, and cost support for silicone products weakened [SMM Silicone Weekly Review]

SMM June 12 News:

Cost: This week, the average price of #421 silicon (used in silicone) in east China was 10,100 yuan/mt, a decrease of 200 yuan/mt WoW. The average price of #421 silicon in east China was 8,700 yuan/mt, a decrease of 100 yuan/mt WoW. This week, domestic spot quotes for silicon metal continued to decline due to weak end-use demand. The price of monochlorosilane remained stable this week, oscillating within an overall range of around 2,100 yuan/mt. The comprehensive cost decreased WoW, and the profits of monomer enterprises continued to increase.

DMC: This week, domestic DMC quotes ranged from 10,700 to 11,500 yuan/mt, with the average price decreasing significantly WoW. This week, the opening quote for DMC on the online mall of a monomer enterprise in Shandong was 11,000 yuan/mt, and the competitive transaction price fell below 10,000 yuan/mt. This week, other domestic monomer enterprises quoted DMC at 11,500 yuan/mt. Due to the recent decline in demand from downstream enterprises and the weakening of cost support brought about by the decrease in domestic silicon metal prices, local transaction prices in the domestic DMC market fell this week. Monomer enterprises with slightly higher inventory levels offered discounts to facilitate sales this week.

Silicone Oil: The dimethyl silicone oil market weakened this week. In terms of price, the market price of conventional viscosity domestic dimethyl silicone oil ranged from 13,500 to 14,000 yuan/mt, with some room for negotiation remaining in actual transactions. Prices fell by 100 yuan/mt during the week, and the center of transaction prices continued to move downward. On the cost side, the price of raw material DMC decreased by 300 yuan/mt within a single week, weakening the price support for silicone oil. Coupled with the impact of substitutes such as cracked silicone oil, this further suppressed the bargaining space for dimethyl silicone oil. In terms of supply, to alleviate inventory pressure, some enterprises still adopted the strategy of "volume discount" to offer discounts and facilitate sales. In terms of demand, it remained persistently weak. To avoid the risk of a continuous decline in raw material prices, downstream enterprises shortened their procurement cycles and maintained small-volume just-in-time procurement as the main approach. Therefore, in the short term, given the weakness in both cost and demand, the price of dimethyl silicone oil is expected to continue to decline.

107 Silicone Rubber: The market for 107 silicone rubber in the silicone sector continued to exhibit a weak and stable pattern this week. In terms of price, the market price of conventional viscosity 107 silicone rubber was approximately 11,800 to 12,400 yuan/mt, with some room for negotiation remaining in actual transactions. In terms of supply, except for the ongoing maintenance of facilities in north-west China, other regions generally maintained normal operations, resulting in sufficient supply. In terms of demand, there was no improvement in end-use market demand, and it was also the traditional off-season, resulting in mediocre market transactions. Therefore, downstream enterprises remained largely bearish on the overall market and adopted a cautious procurement approach. They did not buy the dip and stockpile due to the downward shift in the center of transaction prices, instead maintaining small-volume just-in-time procurement as the main approach. On the cost side, the price of raw material DMC decreased by approximately 300 yuan/mt during the week, providing weak price support for 107 silicone rubber. Therefore, in the short term, given normal supply, weak demand, and weak cost support, the price of 107 silicone rubber in the silicone sector is expected to continue to decline.