The silicone DMC price rally that lasted more than two months pressed pause in mid-October. According to monitoring by Sublime China Information (SCI), as of October 16, mainstream transaction prices in China's DMC market ranged from 14,200 to 14,500 RMB/ton (purified water, acceptance bill, delivered), down 1.37% month-on-month, though still up 27.56% year-on-year.

Supply Side: Emission Reductions Continue but Incremental Supply Looms

In October, domestic monomer plants continued their joint emission-reduction actions, with reduction targets maintained at around 40%, showing no easing compared with September. However, Shandong Jinling's facility is scheduled to restart in October. Under the combined effect of joint emission reductions and the release of new capacity, October silicone cyclosiloxane output is expected to be around 200,000 tons, showing a slight increase compared with September. This change means the expectation that the supply side would "only decrease, not increase" is being broken.

Demand Side: Post-Holiday Follow-Through Below Expectations

During the National Day holiday, most downstream enterprises shut down for 3 to 5 days, and new order follow-through after the holiday remained lackluster. Constrained by below-expectation new orders and strong resistance to downstream cost transmission, silicone rubber and silicone oil enterprises' inclination to chase high prices became cautious during the month, with procurement rhythms shifting to small-volume, on-demand purchases. The difficulty in achieving significant demand expansion has become a key factor restraining DMC prices from continuing their upward trend.

Cost Side: Support Strong Then Weak

The domestic methanol market in October generally showed a rise-then-fall trajectory. Before the holiday, supply remained at low levels due to concentrated maintenance; in the latter part of the week after the holiday, some MTO enterprises saw intensified losses and significantly reduced operating rates, with weakening demand driving market sentiment lower. The other raw material, 421-grade metallurgical silicon, moved steadily upward, accumulating a 100 RMB/ton increase in October. As of October 16, the average DMC production cost stood at 14,185 RMB/ton, up 300 RMB/ton from the same period last month.

Outlook

SCI analysts expect DMC market prices to run steady-to-weak in the second half of October, overall situated in a bull-bear tug-of-war characterized by "relatively strong supply support and weakening demand and cost support." With maintenance facilities in Inner Mongolia and Zhejiang gradually restarting, monomer operating loads are expected to increase somewhat in the second half of the month, but supported by pre-sale order deliveries, short-term enterprise inventory pressure remains generally manageable. Shanghai Securities News, citing SCI analyst Zhang Yingying's forecast, reported projected monthly average DMC prices of 14,200 RMB/ton, 14,000 RMB/ton, and 13,800 RMB/ton for the next three months.

For downstream silicone rubber product manufacturers, raw material prices shifting from rapid ascent to high-level consolidation means the pressure from sharp cost increases has eased somewhat, though downside room is similarly limited. On-demand procurement and controlled inventory rhythms remain relatively prudent strategies at the current stage.

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