The low price of silicon metal has weakened the cost support for DMC, and there is a strong sentiment for competitive bidding and shipping in the market [SMM Silicone Weekly Review]

SMM, June 19:

Costs: This week, the average price of #421 silicon (used in silicone) in east China was 10,100 yuan/mt, with the price remaining stable for the week. The average price of #421 silicon in east China was 8,700 yuan/mt, also stable for the week. Recently, the price of silicon metal has stopped falling and stabilized. Due to the pressure of losses, most enterprises have reduced their willingness to sell at discounted prices. Meanwhile, the recent strong rebound in the futures market has boosted market confidence compared to the previous period. The price of monochlorosilane fell this week, fluctuating around 1,800 yuan/mt. Overall costs decreased WoW, and the profits of monomer enterprises increased slightly compared to the previous week.

DMC: This week, the domestic DMC quotation was 10,200-10,800 yuan/mt, with the average price falling sharply again WoW. This week, DMC was quoted at 10,200 yuan/mt by monomer enterprises in Shandong, down 800 yuan/mt WoW. Other domestic monomer enterprises quoted DMC at 10,400-10,800 yuan/mt this week. Due to the rapid weakening of cost support in the early stage and the sluggish demand during the off-season, DMC enterprises began to cut prices to sell this week, lowering prices multiple times to near the cost line. Recently, some downstream enterprises have started to enter the market for purchases, and trading volume has recovered somewhat compared to the previous period. It is expected that the subsequent DMC price will maintain a trend of fluctuating at lows under the support of costs.

Silicone oil: The dimethyl silicone oil market continued its weak downward trend this week. In terms of prices, the market price of conventional viscosity domestic dimethyl silicone oil was 13,400-13,800 yuan/mt, down about 150 yuan/mt WoW, mainly due to the impact of the decline in the price of raw material DMC, which significantly weakened cost support. In terms of supply, the production pace of manufacturers was slow, and the production site inventory cycle was prolonged. To alleviate inventory pressure, some enterprises sold at discounted prices, intensifying competition. In terms of demand, demand in traditional sectors such as textiles and daily chemicals remained weak. Moreover, to avoid the risk of continued downward movement in raw material prices, downstream enterprises shortened their procurement cycles, maintaining only small, just-in-time purchases. In the short term, under the dual pressures of falling costs and weak demand, dimethyl silicone oil prices will continue to decline.

107 silicone rubber: The market for 107 silicone rubber continued its weak trend this week. The price range for conventional viscosity 107 silicone rubber narrowed further to 11,600-12,000 yuan/mt this week, down about 300 yuan/mt WoW, with some room for negotiation remaining in actual transactions. In terms of costs, the price of raw material DMC continued to decline, weakening cost support. In terms of supply, maintenance units in north-west China gradually resumed production, and supply will increase slightly. In terms of demand, the weak trend continued. The end-use market was in the traditional off-season, and purchase willingness was relatively low. Downstream enterprises generally adopted a wait-and-see attitude, with strong bearish sentiment. Overall, the 107 silicone rubber market this week was trapped in a dual dilemma of collapsing costs and weak demand. With the supply side operating normally and the demand side lacking substantive positive stimuli, the market is unlikely to break out of its weak trend in the short term, and the price of 107 silicone rubber will continue to decline.