Why Did DMC Prices Stabilise Amid Sluggish Demand And High Operating Rates?

This week, online DMC prices of enterprises in Shandong held stable, with the price at 13,400 yuan/mt at the beginning of the week. The lowest selling price was 13,300 yuan/mt during the week. Leading companies kept DMC prices stable, with the current quote at 13,900 yuan/mt, while other enterprises provided quotes at around 13,500-13,600 yuan/mt, with mainstream transaction prices at around 13,500 yuan/mt.

The DMC market experienced slight fluctuations this week. At the end of last week, DMC plants in Shandong made a small concession of 100 yuan/mt. SMM learned that the transaction was relatively strong, with on-hand inventory basically consumed. Therefore, DMC prices stabilised at the beginning of this week, with plants showing a strong willingness to hold offers firm. The prices of DMC, 107 silicone rubber, MVQ, and silicone oil products in Xinjiang held stable this week, and other DMC plants also kept offers stable, with slight fluctuations in transaction prices. The overall transaction range was mostly between 13,500-13,600 yuan/mt.

In terms of supply, the recent supply has continued to increase and is expected to maintain this trend in the future. Although a factory in North China with a new capacity of 200,000 mt saw a slight decrease in operating rate due to equipment issues, its capacity has gradually resumed since this week. Additionally, another factory in East China with the same new capacity is ramping up production, and the 200,000 mt capacity in Central China is expected to be put into production soon. More worthy of attention is that in July, a capacity of 580,000 mt will be added domestically, further strengthening supply expectations.

In terms of demand, the traditional silicone market is in the off-season, with high temperatures and rainy weather affecting the progress of real estate construction, leading to reduced demand for silicone sealants used in real estate. Additionally, demand from the new energy and textile sectors remained at a low level. Therefore, the overall market demand did not see a boost. Silicone sealant producers mainly consumed existing raw material inventories, with low purchasing intentions for products such as DMC.

SMM expects DMC prices to see a slight decline around the end of June, mainly due to oversupply amid the recent increasing supply pressure. Although some enterprises currently still have some orders on hand, they may lower prices to promote sales to cope with the off-season demand.