1. DMC prices are accelerating to bottom out, and market sentiment remains sluggish
This week, organic silicon DMC prices continued to decline, and the market transaction center of gravity continued to move downward. Data on April 14 showed that the mainstream quotation of DMC in Shandong Province was 12,800-13,900 yuan/ton, of which the quotation of Luxi Chemical's first-grade products reached 13,900 yuan/ton. However, as of April 18, the price of DMC fell by 4.43% in a single week, ranking at the top of the list of chemical bulk commodity declines. The mainstream quotation range dropped to 11,300-12,000 yuan/ton, and some companies even bid for shipments on a one-by-one basis.

The downward price is mainly dragged down by the demand side. The shrinking demand of the photovoltaic industry chain has intensified, and the decline in polysilicon prices has led to a sharp drop in orders for photovoltaic films downstream of organic silicon. Coupled with weak procurement in traditional fields such as construction and textiles, the inventory pressure of enterprises has risen. As of April 14, the transaction price of DMC of single enterprises in East China has moved down to 13,500 yuan/ton, but the willingness of downstream to replenish inventory is still low, and the market presents a vicious cycle of "buy high and not buy low".

2. Enterprises' production cuts have been upgraded, and the supply side has actively contracted
Faced with weak demand and high inventory, the scale of production cuts of silicone enterprises has continued to expand. According to news on April 20, the industry's joint production cut plan has entered the substantive implementation stage. Some enterprises reduced production by 40% in April, and the operating rate of single enterprises dropped to 61.49%, a decrease of 1.06 percentage points from the previous week. The operating rates of industrial silicon sample enterprises in major production areas such as Xinjiang and Yunnan have weakened simultaneously, among which the operating rate of Yunnan sample enterprises is only 48%, which is flat from the previous week, but the capacity utilization rate is low.

Although the production cuts have alleviated some supply pressures, market confidence has been restored slowly. On April 17, the mainstream market price of silicone 107 glue fell to 13,000-13,800 yuan/ton, a weekly drop of 100 yuan/ton, indicating that downstream expectations for prices are still pessimistic. Competition among enterprises has intensified, and some monomer plants have maintained cash flow by making concessions, but the overall transaction focus has not changed.

3. Cost support weakens, industry profit margins shrink
The simultaneous decline in raw material prices has further compressed corporate profit margins. Since April, the spot price of industrial silicon has fallen by 69 yuan/ton in total. The decline in metal silicon prices and the stability of methanol prices have led to a decline in DMC production costs, but corporate profits have not improved due to cost reductions. Instead, they face the risk of losses due to intensified price competition.

In the short term, the weak balance of supply and demand in the industry is difficult to change, and the downward space for prices is limited but the rebound momentum is insufficient. Enterprises need to seek breakthroughs through technology upgrades and the development of emerging application areas, and the recovery progress of demand in the photovoltaic industry chain will become a key variable in the recovery of the silicone market.