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Global Silicone Oil Prices Exhibit Downtrend Amidst Collapsing Downstream Demand
Global Silicone Oil Prices Exhibit Downtrend Amidst Collapsing Downstream Demand

Global Silicone Oil Prices Exhibit Downtrend Amidst Collapsing Downstream Demand

  • 04-Jan-2023 2:47 PM
  • Journalist: Robert Hume

Texas (USA): Continuing its previous trend, global Silicone oil prices have continued their bearish rally during November 2022, supported by lacklustre demand. Fear of recession, sufficient availability, and prolonged pressure from pandemic repercussions have obstructed the market growth of Silicone oil.

Data shows a drop in Silicone oil prices of around 3.6% on a monthly basis in the Chinese market, backed by weak cost pressure from the feedstock Silicon metal. On the other hand, demand from downstream industries such as automotive, cosmetics, and others has been sluggish. In addition, under the influence of persistent lockdown implementation and the zero covid policy, manufacturers have started facing a labour shortage coupled with supply chain disruption which majorly pertains to the logistical constraints. Furthermore, manufacturing activity declined in November as Covid-19 outbreaks continued to weigh on both output and demand. According to data, PMI dipped below 50 (i.e., 49.4), signifying a contraction in industrial and manufacturing activity. Inflows of new export orders have also fallen amid weak buying sentiments. Prices of Silicone oil SC-85% 100CST FOB Shanghai were settled at 3515/MT during the same time frame.

Similarly, in the German market, demand for Silicone oil remained under pressure as no substantial purchases were observed and no signs of demand revivals have come to fruition in December. Additionally, low Asian import prices coupled with ease in freight charges from Asia to Europe have been the primary factors for the imported Silicone oil price decrease. Moreover, ample material availability has forced producers to reduce stock levels by lowering Silicone oil prices. According to data released by the National Bureau of Statistics (NBS), the official Purchasing Manager Index (PMI) was observed as 48.0 in November 2022 against 49.2 in October. Thus, a steep fall of around 4.0% was observed during November.

On the other hand, in the US market, production rates remained weak amid stable consumption rates in the domestic market. Meanwhile, imports from the Asia Pacific have improved amid a decline in freight charges, resulting in a price drop of Silicone oil. In addition, demand for Silicone oil from the automotive, pharmaceutical, and allied industries has remained fragile as consumer sentiment continues to remain sluggish in the domestic market, while sufficient inventory levels have forced manufacturers to revise price quotations. As a result, prices of Silicone oil SC-85% 100CST CFR Houston were settled at 4315/MT with a month-on-month decline of 4.2%.

According to ChemAnalyst estimates, “prices of global Silicone oil may continue to decline due to weak feedstock Silicone metal prices. Demand from downstream industries such as automotive, cosmetics, and others is likely to remain weak in the short term as concluded by several experts and shown in the lukewarm GDP growth rates for the first quarter of 2023.”

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