Entering September 2025, after a deep adjustment in the early stage, the silicone market witnessed a rebound from an oversold situation. Many leading enterprises once again initiated a trading halt strategy, and the market supply and demand pattern changed.
Oversold rebound: Driven by both cost and demand
In the early stage, the price of organosilicon continued to decline. The price of DMC (a mixture of dimethylcyclosiloxane) once dropped to near the cost line, intensifying the pressure on enterprises to suffer losses. Leading enterprises represented by Shandong Dongyue and Zhejiang Xin 'an have adjusted supply through planned maintenance and production reduction. Coupled with the weakened cost support brought about by the reduction of electricity prices during the flood season in Southwest China, the market supply and demand relationship has gradually improved.
A wave of market closures: Leading enterprises dominate the market rhythm
To consolidate the achievements of price recovery, enterprises such as Shandong Dongyue, Inner Mongolia Hengyecheng and Hubei Xingfa simultaneously announced the suspension of trading, suspending the external quotations of DMC and raw rubber, 107 rubber and other products. This strategy is exactly the same as the collective market closure in the industry in August, aiming to stabilize market sentiment by controlling supply. According to market feedback, the current production schedules of leading enterprises have been arranged until late September, and the order saturation of some enterprises has exceeded 90%, highlighting the tight supply situation. Meanwhile, the contraction of overseas production capacity has further intensified the contradiction between supply and demand - Dow Chemical announced the closure of 145,000 tons of DMC capacity at its Barry plant in the UK, and the global supply side continues to tighten.
Outlook for the future market: The game between policy and demand continues
Despite the strong short-term rebound momentum, the silicone market still faces multiple challenges. On the demand side, the traditional building sealant sector has seen a contraction in demand due to the adjustment in the real estate market. However, although emerging sectors such as new energy vehicles and photovoltaics have seen significant growth, the overall increase in demand has not yet fully offset the decline in traditional sectors. On the policy front, the "anti-internal competition" policy has been continuously advanced. Five departments including the Ministry of Industry and Information Technology have clearly guided the orderly layout of industries such as photovoltaic and lithium batteries. However, the intensity of administrative intervention has been weaker than market expectations, and the actual effect of industry self-discipline and production cuts still needs to be observed.
From a technical perspective, the DMC price has broken through the fluctuation range since August. If it can hold above the key level of 11,500 yuan per ton, it is expected to challenge the 12,000 yuan per ton psychological mark in the future. However, high inventory pressure (social inventory remains at a high level) and the limited acceptance of high-priced resources by downstream sectors may limit the rebound space. In terms of operation, it is recommended to adopt a wave trading approach in the short term, paying attention to the duration of the leading enterprises' stock suspension and the pace of downstream inventory preparation. In the medium term, be vigilant against the risk of a pullback during the policy vacuum period.
