Silicone DMC margins are inverted

Since September, the overall performance of the domestic silicone DMC market has not been satisfactory
.
Taking Shandong as an example, the average price of silicone DMC in September was 18,500 yuan (ton price, the same below), the price was less than 40% of the same period last year, down nearly 28,000 yuan
.
The industry is in a state of relatively serious losses
.

For the "silver ten" market, industry insiders believe that subject to insufficient demand, the price of silicone DMC is limited, the loss situation is difficult to change, and the performance is seriously insufficient
compared with last year.

The market is well supplied

According to Wang Xiao, an analyst at Longzhong Information, affected by the release of new production capacity in Shanshan in Xinjiang, the silicone DMC market has been sluggish
.

According to the convention, before and after the National Day, the activity of the silicone DMC market will increase, and the downstream pre-holiday replenishment will increase, thereby driving the price to rise
further.
However, from the perspective of this year's market, silicone DMC has been in a downward trend, and the price is at the lowest level of the year, down 22,100 yuan
from the highest price in the year.
Even so, the industry is still pessimistic about the future market
.

From the perspective of device operation, in September, Jinling, Xingfa and Stellar silicone DMC devices were overhauled, and the Hesheng Shihezi plant was still stopped, the load of Luxi device was 80%, and the load of Zhongtian device was 67%, and the overall operating rate decreased
.
However, the inventory consumption level is low, manufacturers have lowered the price of silicone DMC to make a profit to arrange the warehouse, and the inventory pressure of low-priced monomer factories has been eased
.

While facing inventory pressure, net exports continue to decrease, which also puts pressure on the domestic silicone DMC market
.
Southeast Asia's manufacturing industry has limited orders, and foreign natural gas, electricity and other factors have also adversely affected
the import and export of silicone DMC.

For the future market, Wang Xiao believes that the operating rate of the domestic silicone DMC industry in October is expected to be about 67%, and the overall supply side is still sufficient, coupled with the industry's willingness to enter the market, the silicone DMC market is hopeless, and the "silver ten" is not prosperous or a foregone conclusion
.

The loss status is difficult to change

In stark contrast to the sluggish silicone DMC market, the price of raw silicon metal has risen all the way since September, eroding downstream profit space
.

He Junsong, a salesman of Jilin Petrochemical, said that due to the transportation restrictions of the epidemic in Xinjiang, the price of raw material silicon metal is at
a high level.
Especially in late September, due to the shortage of hydropower in Yunnan, the energy efficiency management of the energy-consuming industry in Yunnan Province should be arranged to complete the power load pressure drop
for some industrial silicon enterprises in the province.
There are 139 industrial silicon furnaces in Yunnan, and the energy efficiency management involves a total of 18 units, which affects a total of about 12,000 tons
per month.
As a result, silicon metal 421# rose nearly 750 yuan
in September.

Due to the deviation from the trend of raw materials, the loss of silicone DMC manufacturers reached more than 3,000 yuan
.
Last year, silicone DMC profits were considerable, and the price linkage between silicon metal and silicone DMC was strong
.
This year, the correlation between the two has weakened, silicon metal has steadily pushed up while silicones have continued to fall, and silicone DMC profits have continued to invert.

People in the power industry expect that Yunnan will continue to lack electricity this winter and next spring, and the proportion of electricity in the subsequent dry water period may reach 30%~40%, thereby supporting the price of silicon metal to continue to rise
.
The production cost of silicone DMC may continue to increase, and it is difficult to effectively improve
the profit space.

However, most silicone DMC plants have not stopped work for the time being to change the current situation
.
In the later stage, if the power curtailment policy of silicon metal lands as scheduled, the market price may rise steadily, resulting in the deepening of the inversion of silicone DMC profits, and it is not ruled out that some factories will stop operations
.

Weak demand support

In the eyes of the industry, oversupply is the main factor
leading to the continuous decline in silicone DMC prices this year.
The expansion and start of downstream factories are not as expected, coupled with the large environmental impact, the main downstream real estate industry is sluggish, the export of silicone products is limited, and the textile industry continues to be sluggish
.
Under the pressure of various negative pressures, the demand side is difficult to support silicone DMC
.

According to Liu Jialin, an analyst at Jinlianchuang, the orders received by large silicone rubber manufacturers were not as expected, and year-on-year orders were greatly reduced, in order to control the inventory to maintain a low operating state
.
The silicone rubber market declined after a narrow rebound in September, and overall prices are now at a relatively low level for
the year.
The pessimism of the industry about the future market is difficult to change, and it is necessary to maintain the psychology of falling to the bottom, and just need to follow up
with orders.
The short-term silicone rubber market is difficult to boost
well.

In terms of terminal demand, construction adhesive continued to perform flat, and the real estate industry recovered slowly, which is difficult to boost; The photovoltaic adhesive market accounts for a small proportion, the overall incremental boost is limited, and the subsequent improvement rate slows down; Large rubber compounding manufacturers bid for shipments, demand into the market accompanied by price reduction, factories face profit inversion, terminal silicon products affected by policies, export orders are significantly reduced, production is reduced or stopped, raw material consumption is further reduced
.

Liu Jialin and other market participants said that the terminal market continues to be sluggish, and the downstream demand is weak and difficult to change, which is difficult to support
the silicone DMC market.