Introduction

The first round of price increases in August has officially landed! Last week, various individual factories first concentrated on closing down, demonstrating a unified determination to raise prices. Shandong Fengfeng opened on the 9th, and DMC rose 300 yuan to 13200 yuan/ton, bringing DMC back above 13000 for the entire line! On the same day, a large factory in Northwest China raised the price of raw rubber by 200 yuan, bringing the price to 14500 yuan/ton; And other individual factories have also followed suit, with 107 glue, silicone oil, etc. also experiencing a 200-500 increase.

In addition, on the cost side, industrial silicone is still in a miserable state. Last week, futures prices fell below "10000", causing a further setback in the stability of spot metal silicon. The fluctuation of the cost side is not only conducive to the continuous repair of individual factory profits, but also increases the bargaining chip of individual factories. After all, the current uniform upward trend is not driven by demand, but a helpless move that is unprofitable in the long run.

Overall, based on the outlook for the "Golden September and Silver October", it is also a positive response to the call to "strengthen industry self-discipline and prevent vicious competition in the form of" internal competition "; Last week, the two major wind directions of Shandong and Northwest indicated a price increase, and on the 15th of this week. Although industry insiders generally do not have a positive outlook, the upstream still rises first as a sign of respect, while the middle and lower reaches shout for a rise instead of following suit, emphasizing a sense of atmosphere! There is a clear disconnect between market heat and transaction volume. Therefore, whether the current uptrend can drive transactions remains to be tested, but one thing is certain: it will not fall in the short term, and the general direction is to stabilize and explore the uptrend.

 Low inventory, with an overall operating rate of over 70% 

1 Jiangsu Zhejiang region

Three facilities in Zhejiang are operating normally, with a trial production of 200000 tons of new capacity; Zhangjiagang 400000 ton plant is operating normally;

2 Central China

Hubei and Jiangxi facilities are maintaining reduced load operation, and new production capacity is being released;

3 Shandong region

A plant with an annual output of 80000 tons is operating normally, and 400000 tons have entered the trial stage; One device with an annual output of 700000 tons, operating with reduced load; Long term shutdown of a 150000 ton plant;

4 North China

One plant in Hebei is operating at reduced capacity, resulting in slow release of new production capacity; Two facilities in Inner Mongolia are operating normally;

5 Southwest region

The 200000 ton plant in Yunnan is operating normally;

6 Overall

With the continuous decline of silicon metal and the active preparation of downstream goods at the beginning of the month, individual factories still have slight profits and inventory pressure is not high. The overall operating rate remains above 70%. There are not many active parking and maintenance plans in August, and individual enterprises with new production capacity are also maintaining the operation of opening new and stopping old ones.

107 rubber market:

Last week, the domestic 107 rubber market showed a slight upward trend. As of August 10th, the domestic market price for 107 rubber ranges from 13700-14000 yuan/ton, with a weekly increase of 1.47%. On the cost side, last week the DMC market ended its previous weak trend. After several days of preparation, it finally established an upward trend when it opened on Friday, which directly promoted the inquiry activity of the 107 rubber market.

On the supply side, except for the long-term sideways trend of Northwest manufacturers, the willingness of other individual factories to raise prices has significantly increased. With the lifting of the lockdown measures, various manufacturers have followed the market trend and raised the price of 107 glue. Among them, the main manufacturers in Shandong region, due to their continued good performance in orders, took the lead in adjusting their public quotations to 14000 yuan/ton, but still retained some bargaining space for the actual transaction prices of downstream core customers.

On the demand side of silicone adhesive:

In terms of construction adhesive, most manufacturers have already completed basic stocking, and some have even built warehouses before the peak season. Faced with the rise in the price of 107 adhesive, these manufacturers generally adopt a wait-and-see attitude. At the same time, the real estate industry is still in the traditional off-season, and downstream users' demand for replenishment is mainly rigid, making hoarding behavior particularly cautious.

In the field of photovoltaic adhesive, due to the still sluggish module orders, only leading manufacturers can rely on existing orders to maintain production, while other manufacturers adopt more cautious production scheduling strategies. In addition, the installation plan of domestic ground power stations has not yet been fully launched, and in the short term, manufacturers tend to reduce production to support prices, resulting in a decrease in demand for photovoltaic adhesives.

In summary, in the short term, with the rise of 107 glue, individual manufacturers will strive to digest the orders generated by the buying sentiment. Downstream companies maintain a cautious attitude towards chasing price increases in the future, and are still waiting for opportunities to change in the market with uneven supply and demand, tending to trade at low prices. It is expected that the short-term market price of 107 glue will narrow down and operate.

Silicone market:

Last week, the domestic silicone oil market remained stable with small fluctuations, and trading on the market was relatively flexible. As of August 10th, the domestic market price of methyl silicone oil is 14700-15800 yuan/ton, with a slight increase of 300 yuan in some areas. On the cost side, DMC has risen by 300 yuan/ton, returning to the range of 13000 yuan/ton. Due to the fact that silicone oil manufacturers have already entered the market at a low price in the early stage, they are more cautious about purchasing DMC after the price increase; In terms of silicon ether, due to the further decline in the price of tertiary ether, the expected decline in silicon ether inventory. Overall, the advance layout of silicone oil enterprises has resulted in minimal fluctuations in production costs at the current stage. In addition, the leading factory of high hydrogen silicone oil has raised its price by 500 yuan. As of the time of publication, the main quoted price of high hydrogen silicone oil in China is 6700-8500 yuan/ton;

On the supply side, silicone oil companies mostly rely on sales to determine production, and the overall operating rate is average. Due to leading manufacturers consistently maintaining low prices for silicone oil, it has created price pressure on other silicone oil companies in the market. At the same time, this round of price increases lacked order support, and most silicone oil companies did not actively follow the DMC price increase trend, but chose to stabilize or even adjust prices to maintain market share.

In terms of foreign brand silicone oil, although there are signs of rebound in the domestic silicone market, demand growth is still weak. Foreign brand silicone oil agents mainly focus on maintaining stable shipments. As of August 10th, foreign brand silicone oil agents quoted 17500-18500 yuan/ton, which remained stable throughout the week.

On the demand side, the off-season and high temperature weather continue, and the demand for silicone adhesive in the room temperature adhesive market is weak. Distributors have a weak willingness to purchase, and the pressure on manufacturers' inventory has increased. Faced with rising costs, silicone adhesive companies tend to adopt conservative strategies, replenishing inventory in case of small price increases and waiting and watching to stop during large price increases. The entire industry chain still focuses on stocking up at low prices. In addition, the textile printing and dyeing industry is also in the off-season, and downstream demand is difficult to be boosted by the upward trend. Therefore, it is necessary to maintain rigid demand procurement in multiple aspects.

In the future, although DMC prices are running strongly, the downstream market demand increment is limited, and the buying sentiment is not good. In addition, leading factories continue to offer low prices. This rebound is still difficult to alleviate the operating pressure of silicone oil enterprises. Under the dual pressure of cost and demand, the operating rate will continue to be reduced, and prices will be mainly stable.

New materials are on the rise, while waste silicone and cracking materials are following up slightly

Cracking material market:

The rise in new material prices is strong, and cracking material companies have followed suit slightly. After all, in a loss making situation, only price increases are beneficial to the market. However, the increase in new material prices is limited, and downstream stocking is also cautious. Cracking material companies are also considering a slight increase. Last week, the DMC quotation for cracking materials was adjusted to around 12200~12600 yuan/ton (excluding tax), a slight increase of about 200 yuan. The subsequent adjustments will be based on the rise in new material prices and order volume.

In terms of waste silicone, driven by the market's upward trend, the price of raw materials has been raised to 4300-4500 yuan/ton (excluding tax), an increase of 150 yuan. However, it is still constrained by the demand of cracking material enterprises, and the speculative atmosphere is more rational than before. However, silicon product companies also intend to increase the receiving price, resulting in waste silicone recyclers still being relatively passive, and the situation of mutual restraint among the three parties is difficult to see significant changes for the time being.

Overall, the price increase of new materials has had a certain impact on the cracking material market, but cracking material factories operating at a loss have low expectations for the future. They are still cautious in purchasing waste silicone gel and focus on quickly shipping and recovering funds. It is expected that the cracking material plant and the waste silica gel plant will continue to compete and operate in the short term.

Main raw rubber rises by 200, mixed rubber cautious in chasing after gains

Raw rubber market:

Last Friday, major manufacturers quoted 14500 yuan/ton of raw rubber, an increase of 200 yuan. Other raw rubber companies quickly followed suit and unanimously followed suit, with a weekly increase of 2.1%. From the perspective of the market, based on the price increase signal released at the beginning of the month, downstream rubber mixing enterprises actively completed bottom warehouse construction, and the main large factories have already received a wave of orders at the beginning of the month with absolute price advantages. Last week, various factories were closed down, and the main manufacturers took advantage of the situation to increase the price of raw rubber. However, as far as we know, the 3+1 discount model is still maintained (three cars of raw rubber matched with one car of mixed rubber). Even if the price increases by 200, it is still the first choice for many mixed rubber enterprises to place orders.

In the short term, the raw rubber of major manufacturers has the advantage of being super hard, and other raw rubber companies have little intention of competing. Therefore, the situation is still dominated by major manufacturers. In the future, in order to consolidate market share, major manufacturers are expected to maintain a relatively low price for raw rubber through price adjustments. However, caution should also be exercised. With a large amount of mixed rubber from major manufacturers entering the market, a situation where raw rubber rises while mixed rubber does not rise is also expected to emerge.

Rubber mixing market:

From the beginning of the month when some companies raised prices to last week when leading factories raised their raw rubber prices by 200 yuan, the confidence of the rubber mixing industry has been significantly enhanced. Although the market's bullish sentiment is high, from the actual transaction situation, the mainstream quotation in the rubber mixing market is still between 13000 and 13500 yuan/ton. Firstly, the cost difference of most conventional rubber mixing products is not significant, and the increase of 200 yuan has little impact on costs and no obvious differentiation; Secondly, orders for silicon products are relatively stable, with basic rational procurement and transactions remaining the focus of the market. Although the desire to increase prices is evident, the prices of rubber compounds from leading factories have not changed. Other rubber compound factories dare not raise prices rashly and do not want to lose orders due to small price differences.

In terms of production rate, the production of mixed rubber in mid to late August may enter a vigorous state, and overall production may show a significant increase. With the arrival of the traditional peak season of "Golden September", if orders are further followed up and inventory is expected to be replenished in advance in late August, it is expected to further drive the market atmosphere.

Demand for silicon products:
Manufacturers are far more cautious about market price increases than they actually take action. They only maintain a moderate amount of supply at low prices for essential needs, making it difficult to maintain active trading. In order to promote transactions, rubber mixing still falls into a price competition situation. In summer, the order volume for high-temperature products of silicon products is relatively large, and the order continuation is good. Overall, downstream demand is still weak, and with poor corporate profits, the price of mixed rubber is mainly fluctuating.

Market prediction

In summary, the dominant force in the silicone market in recent times lies in the supply side, and the willingness of individual manufacturers to raise prices is increasingly strong, which has eased downstream bearish sentiment.

On the cost side, as of August 9th, the spot price of 421 # metal silicon in the domestic market ranges from 12000 to 12700 yuan/ton, with a slight decrease in average price. The main futures contract Si24011 closed at 9860, with a weekly decline of 6.36%. Due to the lack of significant positive demand for polysilicon and silicone, it is expected that industrial silicon prices will fluctuate within the bottom range, which will have a weak impact on the cost of silicone.

On the supply side, through the strategy of closing down and pushing up prices, the strong willingness of individual factories to raise prices has been demonstrated, and the focus of market transactions has gradually shifted upward. Specifically, individual factories with DMC and 107 adhesive as their main sales force have a strong willingness to increase prices; The leading factories that have been sideways for a long time have also responded to this round of rise with raw rubber; At the same time, two major downstream factories with strong industrial chains have officially issued price increase letters, with a clear attitude to defend the bottom line of profits. This series of measures undoubtedly injects a stimulant into the silicone market.

On the demand side, although the supply side has shown a strong willingness to raise prices, the situation on the demand side has not been fully synchronized. At present, the demand for silicone adhesive and silicone products in China is generally high, and the driving force of terminal consumption is not significant. The load on downstream enterprises is generally stable. The uncertain status of peak season orders may drag down the warehouse building plans of midstream and downstream manufacturers, and the hard won upward trend this round will weaken again.

Overall, the rise in the organic silicon market this round is largely driven by market sentiment and speculative behavior, and the actual fundamentals are still relatively weak. With all the positive news on the supply side in the future, the third quarter of the 400000 ton production capacity of Shandong manufacturers is approaching, and the 200000 ton production capacity of East China and Huazhong is also delayed. The digestion of the huge single unit production capacity is still the hanging sword in the organic silicon market. Considering the upcoming pressure on the supply side, it is expected that the silicone market will mainly operate in a consolidated manner in the short term, and price fluctuations may be limited. It is advisable to take timely measures to ensure safety.
(The above analysis is for reference only and is for communication purposes only. It does not constitute a recommendation for buying or selling the goods involved.)

On August 12th, mainstream quotations in the silicone market: