Rising Inflation Impacts the Silicone Oils Price in China

Singapore: Since August, the Chinese Silicone Oils price has observed a significant dip in the offered quotations from the producers in the domestic market. As per the market sources, the domestic prices for Silicone Oils have dropped by marly 2.46% since the last week of July. Overall slight bearish sentiments prevail in the provincial markets of eastern China, where the current prices for Silicone Oils are on the lower side compared to the last month.

Whereas, in the Northwestern region, production facilities for Silicone Oils are witnessing stable operating loads despite the hovering uncertainties in regional markets. Although, the downstream market participant and the end-users are procuring efficient volumes on a need-to basis, keeping spot transactions balanced amidst the improved stocking sentiments in several provinces of the North and Eastern regions.

Currently, the Chinese authorities are observing several economic woes with the restrictions regarding the rising COVID cases in the domestic markets. As a ripple effect, the overall momentum of the manufacturing industry has fallen significantly despite a relatively subdued demand outlook in the domestic market. The inadequate performance of the real estate sector in China levied a significant impact by weakening the procurement sentiments amongst the market participants. Although, the active consumption from the Automotive, textile, and improved restocking sentiments amongst the domestic players in the regional market balance the supply-demand gap besides fluctuating the prices for Silicone Oils on a lower side.

In addition, the spread between the upstream Silicon metal and Silicone Oils has narrowed amidst the rising cost support for Silicon metals amidst the increasing inflation and rising geopolitical conflicts between China, Taiwan, and the USA.

According to the ChemAnalyst pricing intelligence, the Silicone Oils in the Chinese domestic market will likely stagger on a downside in the short term. However, further improvement in the staged restocking-based procurement is expected to support the quotations while altering the current short-term forecast for Silicone Oils in the Chinese domestic market.