DMC Transaction Center Continued to Edge Down, Bearish Expectations Persisted in Silicone Market [SMM Silicone Weekly Review]

SMM, June 4:

Cost: On June 4, 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, also stable WoW. This week, the silicon metal price center moved sideways with a slight upward bias. Silicon suppliers held firm on offers, while downstream purchase wait-and-see sentiment was strong and market transactions were sluggish. Methyl chloride prices remained stable WoW, with the market average at around 3,000 yuan/mt. The comprehensive production costs of silicone monomer enterprises remained stable WoW.

DMC: This week, the transaction center of China's silicone DMC market continued to decline, with the main transaction range at 14,200-14,500 yuan/mt, an average of 14,350 yuan/mt, down approximately 200 yuan/mt WoW. Demand side, the overall situation remained weak. Slow terminal shipments and inventory at high levels transmitted upward, leading to cautious purchasing sentiment. Combined with the continued decline of the overall market transaction center over the past two weeks, wait-and-see and bearish sentiment remained strong. Some mid- and downstream enterprises with relatively low raw material inventory only restocked on a just-needed basis given the still unclear market conditions. Supply side, industry operating rates were at a relatively high level. Previously pre-sold orders were gradually being fulfilled, with weak follow-up of new orders. Enterprises sold at volume discounts, and supply pressure gradually emerged. A new round of industry meetings is about to be convened to further discuss emission reduction details to ease supply-demand issues. In the short term, under a pattern of ample supply and weak demand, although expectations for production cuts provided a floor, market inventory digestion still requires time. DMC prices are expected to mainly move sideways. If emission reduction implementation falls short of expectations or downstream remains sluggish, prices still face risks of further downward pressure. Key attention should be paid to the progress of producers' emission reduction implementation and the downstream purchase pace.

Silicone oil: This week, the regular viscosity silicone dimethyl silicone oil market price reached 16,200-16,700 yuan/mt, with an average of 16,450 yuan/mt, still stable WoW. Although offers held steady for two consecutive weeks, affected by declining raw material prices and relatively low selling prices from monomer enterprises, downstream bearish sentiment intensified. Purchase enthusiasm was low, overall market transactions were mediocre, and enterprise shipments were slow. In the short term, silicone oil prices are expected to trend weakly.

107 silicone rubber: This week, the regular viscosity silicone 107 silicone rubber market transaction price range was quoted at 14,300-14,600 yuan/mt, with an average of 14,450 yuan/mt. Downstream purchasing showed divergence: enterprises with relatively low raw material inventory restocked in batches on an as-needed basis to maintain production, while clients whose end-use demand was relatively slow and whose raw material inventory could still meet production needs showed weak purchasing enthusiasm. Combined with bearish sentiment driven by declining DMC prices, overall wait-and-see sentiment was strong. The market currently still lacked support. Cost side and demand side were both weak, and 107 silicone rubber prices are expected to remain in the doldrums in the short term.

MVQ: The price range of MVQ was approximately 15,000-15,400 yuan/mt this week, with an average price of 15,200 yuan/mt. The tug-of-war between upstream and downstream in the MVQ market continued. Although upstream producers were expected to reduce supply, declining raw material prices fueled bearish sentiment in the market. Downstream enterprises, aiming to control production costs, mainly purchased on a just-needed basis and notably pushed for lower prices, resulting in weak price support. MVQ prices are expected to maintain a fluctuating trend and move sideways in the short term.