Rise in Silicone Oil prices in Europe and US Hints a Sign of Recovery in Lubricants Sector

Silicone Oil prices have largely remained flattened in the month of March with stable pricing in the first two weeks followed by sharp increase in prices across US and European markets by the end of March 2024. Monthly recovery of around 4% in prices by the end of the month puts Silicone Oil market into focus. This upward movement is also supported through cost push due to high petroleum feedstock pricing and supply issues. While on the demand front, Silicone Oil prices rallied up due to stronger demand from lubrication and cooling demand from semiconductor/electronics industry as inventory pressure intensifies in FY24.

In Europeawn and US markets, prices of Silicone Oil largely remained flat throughout the month of March largely owing to gradual rise in demand sentiment and US suppliers undertaking cautious procurement as manufacturing recovery slowed down. Data from February showed inflations sticking in US continues to worry suppliers and is affecting manufacturing recovery. Data points out inventory destocking in FY23 reduced overall Silicone Oil market consumption by 7% in FY23 with prices falling by 34% viz-a-viz FY22 price levels. With interest rate surging from 1% to 5.5% from FY22 till the end of FY23, price levels and demand analysis show that destocking is nearly over in February 2024, Silicone Oil demand from manufacturing and industrial sectors is set to recover in FY24 due to inventory pressures increased. Wacker Chemie’s projections for flat Q1FY24 in Silicone Oil market are retained by ChemAnalyst in their forecast situation for FY24. Though ChemAnalyst maintain overall upward price movement for the month of March and April, due to supply disruptions and high crude price volatility over the past two months. Silicone Oil suppliers in Europe are facing moderate energy prices at stable demand for Silicone Oil. With crackers and other heavy manufacturing in Europe beginning to run with higher operating levels, demand for Silicone Oil is rapidly picking up for industrial applications. LANXESS also revealed that their end use customer demand is picking up with automotive markets leading the overall improvement. Price recoveries, according to LANXESS is modest in Q1FY24 to pace up in the coming quarters as customers as well as suppliers are gauging global supply situation emerging from Red Sea and OPEC+ voluntary crude cuts.

Silicone Oil market in Asia is currently stable with Japan and Korea observing strong and rising demand especially from semiconductor applications. Industrial demand is gradually picking up, although at slower pace than consumer and industrial electronics. China is observing weak consumer demand especially for Silicone Oil applications throughout segments as prices fell in the past two weeks due to destocking observed by companies, though ChemAnalyst retain price improvement for APAC region as market sentiment remain bullish with buyers retaining their willingness to procure Silicone Oil for the coming months in China.