With Weak Downstream Demand, Silicone Oil Prices Showcase a Downtrend Across the Globe
With Weak Downstream Demand, Silicone Oil Prices Showcase a Downtrend Across the Globe

With Weak Downstream Demand, Silicone Oil Prices Showcase a Downtrend Across the Globe

  • 15-Mar-2023 4:43 PM
  • Journalist: Motoki Sasaki

Silicone Oil prices have continued to show a bearish trend across the global market during February 2023. Cheap Asian imports and gloomy demand coupled with ample availability in the respective market have weighed down the prices of Silicone Oil.

Prices of Silicone Oil in the Chinese market have plunged, supported by lackluster demand from both the domestic and overseas markets. In terms of domestic production, operating rates have remained stable, resulting in sufficient inventories in the domestic market. Meanwhile, feedstock Silicon metal cost has been on the lower side resulting in the low production cost of Silicone Oil in the domestic market. On the other side, demand from the downstream automotive, pharmaceutical, and other competitive industries has subdued, while adequate inventories cater to the overall demand. As per the sources, China's export rate for January-February month declined by around 6.8%, highlighting the continuous frailty in global demand. In conclusion, prices of Silicone Oil FOB Shanghai were assessed at SC-85% 100cst 3020/MT with a month-on-month decrement of 5.6% during February.

Similarly, in the German market, Silicone Oil prices have been observed on the softer side due to bearish demand, although the cost of production has been high as feedstock Silicon metal prices increased during this month. On the other side, Asian imported prices have been comparatively lower than domestic prices as prices continued to drop in the Asian market. Furthermore, the European region has witnessed a dip in PMI for February 2023 as Eurozone Manufacturing PMI declined to 48.5, measurings a dip of 0.6% on a monthly basis and remaining in contraction. The demand for Silicone Oil from downstream industries, including automotive, pharmaceutical, and other competitive industries, has been weak as the end-users reported limited new orders. Thus, prices of Silicone Oil FOB Hamburg fell by 1.0% during the same time frame.

Furthermore, in the USA, Silicone Oil prices witnessed a stagnancy with a marginal decline of 0.5% due to stable demand dynamics while the firm material was in the domestic market. Meanwhile, low Asian imported prices resulted in a price decline in the domestic market. In addition, rates for shipping containers from Asia to the USA have been declining as congestion at ports on the East and West coasts has largely subsided amid a reduction in USA consumer demand for goods. The Global Supply Chain Pressure Index (GSCPI), developed by the Federal Reserve Bank of New York, shows that overall pressure on global supply chains significantly declined in February and is now below the historical average.

As per ChemAnalyst, "global Silicone Oil prices will expect to drop in the upcoming month due to further expectation of dwindling demand from the downstream automotive and other industries."

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