Poor Downstream Performance Drives Down the European Dimethylcyclosiloxane (DMC) Prices
- 30-Jan-2023 4:23 PM
- Journalist: Yage Kwon
Dimethylcyclosiloxane (DMC) prices are decreasing in the European market due to the weak demand for downstream commodities like silicone rubber and silicone oil. DMC prices have been declining steadily during the third quarter and continued the trend in the fourth quarter of 2022. The concerns of recession in European markets further contributed to the decreasing pricing trend for DMC in Europe. Despite the declining operation rates in Europe during the holiday seasons, the high levels of inventories abetted by the easing energy prices during the year-end in Europe contributed to cheaper costs in the domestic markets. Due to end users' wait-and-buy decisions prompted by their fear of a recession and the holiday season, the product's manufacturers were compelled to lower their prices in the domestic markets. The poor performance of the downstream cosmetic sector in the European region further contributed to the pricing trend of DMC in Europe.
The relatively weak performance of the automotive industry in Europe weakened the buying sentiments of the downstream Silicone rubber in several European countries. Since Europe is largely self-reliant for DMC, the weak economic situations in major economies like US and China did not impact European product costs. The demand for downstream silicon oil is poor in the European markets, as there is a minimal requirement for lubricants, heat transfer, and hydraulic fluids. The average demand scenario from the cosmetics industry further weakened the demand for DMC as well as the demand for downstream silicone oil in the European markets.
According to ChemAnalyst, Since the beginning of the third quarter of 2022, the prices of DMC in Europe have been declining. The forecast of DMC prices for 2023 looks weak as the recovery of the downstream cosmetic sector and automotive sector in European markets is likely to only occur during the second quarter of 2023.