Silicone product prices plunged sharply, with bearish sentiment dominating the market [SMM Silicone Weekly Review]

SMM, July 16:

Cost side, on July 16, the average price of #421 silicon (used in silicone) in east China was 9,500 yuan/mt, flat MoM, and the average price of #421 silicon in east China was 9,350 yuan/mt, flat MoM. This week, a stronger spot-futures price spread and persistently high trucking freight costs kept silicon metal prices in east China relatively firm. Cost support from futures prices at the bottom remained clear, while the upside was capped by the supply-demand relationship, keeping silicon metal prices moving sideways. The price of methyl chloride fell 100 yuan/mt WoW, with the market average price at around 2,500 yuan/mt. The overall production cost for silicone monomer enterprises still edged down slightly WoW.

DMC: This week, although domestic silicone DMC supply experienced a slight contraction, it still outpaced demand. The tug-of-war between upstream and downstream intensified, pushing the market back into price competition, with transaction prices plummeting to year-to-date lows. The current DMC transaction range dropped to 12,000–12,500 yuan/mt, down around 700 yuan/mt from the average transaction price at the beginning of the month. Demand side, end-use demand showed no notable improvement, with midstream and downstream players mainly buying as needed. Affected by the ongoing price decline, purchasing sentiment turned cautious—inquiries increased, but actual deals remained restrained, with some clients waiting for prices to hit bottom before stockpiling. Supply side, monomer facility operating rates diverged; some units cut runs or were shut down to focus on destocking, while others had resumed production. Overall, reductions outweighed increases, but aggregate supply still exceeded demand, causing inventory at some monomer enterprises to continue accumulating and keeping supply-side pressure elevated. In the short term, bearish sentiment dominated the market, and DMC prices are expected to stay weak, with the domestic DMC market likely to consolidate on a weak note.

Silicone Oil: This week, the conventional-viscosity dimethyl silicone oil market declined sharply. The transaction price range fell to 14,700–15,300 yuan/mt, with an average price of 15,000 yuan/mt, down 850 yuan/mt WoW. A continued decline in feedstock DMC prices caused cost support to visibly collapse, driving silicone oil prices lower. Demand side, overall market activity remained in the weak off-season, with no signs of improvement from end-users. Downstream sentiment was deeply bearish, with a strong desire to bargain down prices, as the market only saw small-volume, need-based deals and a slow stockpiling pace, leaving bears firmly in control. In the short term, under the dual pressure of weakening costs and demand, dimethyl silicone oil prices are expected to continue consolidating on a weak note.

107 Silicone Rubber: This week, the conventional-viscosity 107 silicone rubber market faced the dual pressure of collapsing cost support and persistently weak demand, sending transaction prices sharply lower. The price range was 12,800–13,000 yuan/mt, with an average of 12,900 yuan/mt, down around 650 yuan/mt from the average transaction price at the beginning of the month. Demand side, end-users remained in the seasonally weak demand period, with slow shipments of downstream silicone sealant finished products and relatively weak shipment prices, putting enterprises under significant overall pressure. As a result, raw material procurement stayed cautious. Combined with the decline in DMC prices, the push for lower prices intensified, and only small-volume, need-based deals were done. In the short term, the current pattern of both weak costs and demand is clear, market pessimism is strong, and the price of 107 gum is expected to remain under pressure and in the doldrums.

MVQ: This week, the MVQ market price range was 13,500-14,000 yuan/mt, with an average price of 13,750 yuan/mt, down 900 yuan/mt WoW. Raw material DMC continued to decline, and with the industry's off-season impact, market bearish sentiment was strong. Downstream mixed rubber enterprises showed clear signs of further pushing for lower prices, and procurement was mainly based on rigid demand in small orders, with no intention of concentrated restocking. In the short term, the fundamentals are weak, and MVQ prices will remain under pressure.