DMC Seemingly Stable but Quietly Declining, Silicone Market Tug-of-War Intensifies [SMM Silicone Weekly Review]

SMM, May 28:

Cost: On May 28, the average price of #421 silicon (used in silicone) in east China was 9,600 yuan/mt, stable WoW, and the average price of #421 silicon in east China was 9,400 yuan/mt, stable WoW. Spot silicon metal prices were basically stable this week, with a subdued trading atmosphere. Methyl chloride prices were stable WoW, with a market average of about 3,000 yuan/mt, and the comprehensive production costs of silicone monomer enterprises were stable WoW.

DMC: This week, China's silicone DMC market was nominally stable but actually weakening, with the transaction range shifting down to 14,300-14,800 yuan/mt, an average of 14,550 yuan/mt, down about 350 yuan/mt WoW. In terms of regional quotations, mainstream quotations in Shandong and other regions were all at 14,800 yuan/mt. After mid-week price dips, rigid demand transactions recovered slightly, but downstream wait-and-see sentiment remained strong, with no concentrated procurement for the time being. On the supply side, the overall industry operating rate was about 70%, with overall supply being loose. To stabilize prices and destock, monomer enterprises plan to intensify emission reduction efforts from June to August, raising the reduction ratio to 40%, up 5 percentage points from before, and will further increase it to 45% if supply and demand do not improve, with specific implementation plans to be further clarified after the industry meeting in early June. In the short term, under the pattern of weak demand, the tug-of-war between upstream and downstream is gradually intensifying, and DMC prices are expected to be generally stable with slight fall. Going forward, attention should be focused on the progress of industry emission reduction implementation and actual upstream order-taking situations.

Silicone oil: This week, the regular viscosity price of silicone dimethyl silicone oil market was at 16,200-16,700 yuan/mt, with an average of 16,450 yuan/mt, stable WoW. The downward shift in raw material DMC center weakened cost support, but silicone ether prices remained firm at high levels, supporting relatively stable silicone oil quotations. Market inquiries improved slightly during the week, but downstream wait-and-see sentiment persisted, with transactions mainly driven by rigid demand and insufficient follow-up on bulk procurement, pending further market clarity. In the short term, under the intertwining of bullish and bearish factors on the cost side and weak downstream demand, silicone oil prices are likely to continue to move sideways.

107 silicone rubber: This week, the market transaction price range for regular viscosity silicone 107 silicone rubber was quoted at 14,300-14,800 yuan/mt, with an average of 14,550 yuan/mt. End-use demand remained weak, upstream transaction center shifted downward, and downstream silicone sealant enterprises had limited acceptance of high prices due to slowing finished product shipments and compressed profit margins. Current market transactions were mainly driven by rigid demand, with no concentrated restocking for the time being, and the price tug-of-war between upstream and downstream continued. The short-term market lacks clear support, and prices are expected to remain in the doldrums.

MVQ: This week, the MVQ price range was about 15,000-15,400 yuan/mt, with an average of 15,200 yuan/mt. Cost support weakened, coupled with the downward shift in monomer producers' transaction center, the market was generally weak, but some producers still had support from pre-sold orders, and quotations remained relatively firm. On the demand side, downstream compound rubber enterprises mainly transacted new orders based on rigid demand, and their expectations for the future market remained cautious.