Silicone product transaction prices hit a new stage low again, while the tug-of-war between upstream and downstream continues [SMM Silicone Weekly Review]

SMM July 23 –

Cost: On July 23, the average price of #421 silicon (used in silicone) in east China was 9,500 yuan/mt, flat from the previous day, while the average price of #421 silicon in east China was 9,350 yuan/mt, flat from the previous day. This week, silicon metal producers held prices firm, with low willingness to sell at deep discounts. Low futures prices and strong downstream wait-and-see sentiment kept silicon metal prices in a low-level stalemate. Methyl chloride price was flat WoW, with a market average of about 2,500 yuan/mt, and the comprehensive production costs of silicone monomer enterprises remained stable WoW.

DMC: DMC prices continued to weaken significantly this week, with the transaction range sliding to 11,300-11,500 yuan/mt, down 850 yuan/mt WoW. Demand side, given no improvement in end-use demand, declining transaction prices made mid and downstream clients more cautious in purchasing. Currently, although raw material inventories of some clients have dropped to low levels, they remain on the sidelines, with limited willingness for concentrated stockpiling, and are only making small-volume, just-in-time purchases while pushing for lower prices, waiting for market prices to fall further to psychologically expected levels before buying the dip to stockpile. Supply side, multiple monomer facilities that underwent maintenance earlier have gradually resumed production, coupled with some enterprises slightly raising operating rates, leading to an overall increase in market supply. Upstream producers are under inventory pressure, and their willingness to offer discounts to sell has also pushed transaction prices lower. In the short term, market bearish sentiment remains strong, and domestic DMC prices are expected to remain in the doldrums.

Silicone oil: This week, the transaction price range for conventional viscosity dimethyl silicone oil was 13,900-14,500 yuan/mt, averaging 14,200 yuan/mt. The continuous erosion of cost support, coupled with persistently weak demand, led upstream producers to compete on price in order to secure new orders, fostering strong overall bearish sentiment and further dragging down silicone oil prices. In the short term, the weak pattern in costs and demand is unlikely to change, and dimethyl silicone oil prices are expected to consolidate on a weak note.

107 silicone rubber: This week, the transaction price range for conventional viscosity 107 silicone rubber was 12,000-12,500 yuan/mt, averaging 12,250 yuan/mt, with the transaction center continuing to shift downward. Demand side, with no signs of improvement in end-use demand and downstream silicone sealant enterprises operating at low rates, the sentiment of rushing to buy amid continuous price rise and holding back amid price downturn has prevailed. Although the continuous decline in raw material prices has slightly boosted downstream inquiry activity, enterprises are only making small-volume, just-in-time purchases as needed, with weak willingness for proactive concentrated stockpiling. The tug of war between upstream and downstream over transaction prices continues to intensify.

MVQ: MVQ prices plunged sharply this week, with the transaction range falling to 12,200-12,500 yuan/mt, averaging 12,350 yuan/mt. Currently, leading producers have significantly cut prices on their online platforms, strongly stimulating downstream enterprises to rush in and stockpile at the bottom, which has driven a rapid destocking of their inventories. Bearish market expectations persist. Therefore, in the short term, MVQ prices are expected to remain in the doldrums.