The hot and dry summer is supposed to be the traditionally low season for the silicone industry, but in 2021, just like the recurrence of the epidemic, there will be many uncertainties in both overseas and domestic markets. Silicone upstream companies have ushered in the business cycle, and they have been "rising" almost every month.
Silicone basic raw materials have gone farther and farther on the way to increase prices. Following the collective announcement of price increases by Shandong monomer companies, four major companies in Zhejiang, the most concentrated area of domestic monomer companies, have also released price increases. The prices of raw materials have been "rising" almost every month, and the top 10 monomer companies have been all "happy" in the first half of the year.
The central bank released July social financial data, and the overall growth rate has dropped sharply to 10.7%, setting a new low under the current currency cycle, and lower than the previous market expectation of 10.9%. In addition, from the perspective of credit structure, household credit has shrunk sharply year-on-year, especially mid- and long-term corporate loans have also shrunk sharply. This is the first time since March 2020 that there has been a small increase. According to the industry, in the context of the rapid increase in the cost of various raw materials, it is difficult for organic silicon midstream and downstream companies to make money. 61.3% of the midstream and downstream businesses have begun to shrink significantly, and they have given up medium and long-term loans.
According to the industry, the giants directly "locked in" the sales price in the off-season in August, showing a certain intention to keep the price up. Affected by the collective price lock of leading companies and the advance price increase of August products, the current silicone prices continue to remain high. After entering August, the market entered the early period of the peak season. Coupled with the approaching "golden nine silver ten" peak consumption season, sustained economic recovery, and support from the cost end of silicon metal, it is possible for the organic silicon industry chain to rise further in the third quarter. The industry concentration and monopolistic behavior of the giants have strong control over the prices of raw materials such as DMC and raw rubber. Silicone prices are likely to rise further. It is recommended that midstream and downstream companies be prepared to continue to be under pressure.
Some analysts believe that the superimposed export, cost factors, and the "golden nine silver ten" peak season is coming and other positive expectations, the organic silicon price is expected to continue to run at a high level in the third quarter. For the top 10 domestic monomer manufacturers, the profit scale in the third quarter of this year is still expected to achieve a month-on-month increase. It is expected that the profit scale of the top 10 monomer companies in 2021 will likely hit a new high in the history of domestic organic silicon development.
According to people familiar with the matter, there has been a split in the upstream this week, and some orders are not satisfactory. It is expected that the Chinese silicone market will face brutal competition in the next few months. On Wednesday, after a company publicly offered 500-800 yuan per ton profit for different customers (class A, B), the market responded generally, and the CEO of the company bluntly said that the scope of the profit would be increased next week. Many other upstream companies have expressed that they will carry out profit-sharing operations depending on the actual situation.
It is currently in the off-season of consumption. Domestic consumption has shown signs of diminishing margins since the end of July. We have seen that the decline in inventory data has slowed down or even increased. However, because overseas consumption has been good, domestic consumption has not weakened. This has brought pressure on the price of organic silicon, and the downstream has been passively receiving goods at high prices. However, after the DMC disk price occupies a high position of more than 30,000, the data shows that the middle and lower reaches of the middle and lower reaches do not recognize this high price, and cannot accept it, and maintain rigid demand.
Source: Mobile Public Account
