1. Price Trend: DMC Price Continues to Fall, Regional Differentiation is Obvious
This week (6.16-6.22), the market price of organic silicon intermediate DMC continued to fall. As of June 20, the price of DMC in East China fell to 10,200-10,800 yuan/ton, down 10% from the beginning of the month, while the price in Shandong remained in the range of 11,500-13,500 yuan/ton.
The downward trend in prices is mainly driven by three factors:
Weakened support on the cost side: The futures price of metal silicon fluctuated weakly, and the spot price of 553# silicon in East China Tongyang remained at 8,000-8,300 yuan/ton, easing the pressure of cost transmission;
Weak demand side: The construction and home improvement market has entered the traditional off-season, and downstream companies are in a wait-and-see mood, and the purchase volume has been reduced;
Inventory pressure: The industry's inventory level is high, and some companies are bidding to ship to reduce inventory, which has aggravated the downward pressure on prices.

2. Supply and demand pattern: capacity expansion slows down, demand structural differentiation
Supply side: the industry's operating rate remains at around 70%, and new capacity is limited. The new capacity of a few companies such as Inner Mongolia Xingfa has not yet been implemented, and the industry's supply pressure has been temporarily relieved.
Demand side:
Traditional fields: the demand for building sealants and home decoration materials continues to be sluggish, dragging down the overall demand for silicone;
Emerging fields: the demand for photovoltaic module encapsulation glue, lithium battery electrolyte additives, 5G base station heat dissipation materials, etc. has grown against the trend.

3. Corporate dynamics: Head companies accelerate layout, and technical barriers become the key to competition
Industry chain integration: Companies such as Hesheng Silicon Industry reduce costs and consolidate their market position through the integrated model of "industrial silicon-organic silicon monomer-terminal products";
Technological breakthroughs: Dongyue Silicon Materials' electronic-grade phenyl silicone oil has a purity of 99.9999%, which is used in 5G base station high-frequency circuit packaging; Xin'an shares' high-transparency silicone rubber has achieved domestic substitution and entered the semiconductor packaging field;
Market expansion: Jianghan New Materials' silane coupling agent has the largest global market share and has become a core supplier of European photovoltaic companies, with an overseas market share of more than 20%.

4. Future Outlook: Short-term pressure, medium- and long-term demand potential is expected
In the short term, affected by weak demand in the construction market, inventory pressure and weakened support on the cost side, the price of silicone may remain low and fluctuate. In the medium term, with the implementation of favorable real estate policies and the continued growth in demand for new energy vehicles and photovoltaic industries, the supply and demand pattern of the silicone industry is expected to improve and the prosperity is expected to pick up. It is recommended to focus on companies with full industry chain integration capabilities, high technical barriers and binding core customers in emerging fields such as new energy and semiconductors.