For the Quarter Ending June 2023
North America
Overall, Silicone oil prices have decreased in the US market during the second quarter of 2023 due to moderate demand and sufficient inventories in the domestic market. The inquiries from the downstream construction, cosmetic as well as automotive industries have remained steady in the domestic market. The downstream procurements were mainly based on immediate requirements reported by market players. In addition, the ample material available via the steady inflows of imports from Asia or other exporting nations has led to the supply dominant market. Moreover, the freight charges from East Asia/ China to the USA have declined by 1.49% every month for 20 ft container feet during May. Meanwhile, growing fears of a recession in the wake of the failure of key banks in America, coupled with aggressive rate hikes of central banks to tame inflation, have impacted the purchasing power of consumers. Although, after peaking at 9% in June of the last year, the US inflation rate has steadily decreased, indicating that the US Federal Reserve’s tight monetary policy approach has reduced inflation, but it’s still above the target of 2%. As a result, prices of Silicone oil SC-85% 100 cst-3300/MT, CFR Houston, with a month-on-month decrement of 7.3% during June 2023.
Asia-pacific
Silicone oil prices have continued to decline in the South Korean market during the second quarter of 2023, backed by moderate demand and sufficient inventories in the domestic market. The inquiries from the downstream automotive, construction as well as cosmetic industries have remained steady. The market transactions were mainly based on small orders as the enthusiasm of the terminal firm to enter the market was not strong. On the supply front, the ample material available in the South Korean ports via the steady inflows of imports from China and other Asian market has led to supply dominant market. The freight charges also declined on the major trade routes amid weak global demand, which further weighed down the prices of Silicone oil in the domestic market. Furthermore, the South Korean manufacturing Purchasing manager’s index dropped from 48.4 in May to 47.8 in June, indicating a contraction zone. Moreover, as per the market sources, core Inflation, which excludes volatile food and energy prices, slowed from 3.9% to 3.5% in June, which eased the price pressure on Silicone oil. As a result, prices of Silicone oil SC-85% 100 cst-2480/MT, CFR Busan, with a monthly decline of 10.8% during June 2023.
Europe
Silicone oil prices have inched lower in the German market throughout the second quarter of 2023 owing to weak feedstock prices and sufficient inventories in the domestic market. The firm inflation rates and consequent rise in interest rates to contain it had a heavy toll on the demand fundamentals. The underwhelming performance of the construction industry in Q2 is a stark example of the toll. Meanwhile, the competition from the Asian market has been relentless, and the pressure mounts on businesses in the European region. In the meantime, demand from other industries like cosmetics and automotive has remained moderate, and it didn’t lead to an increase in the prices of Silicone oil in the domestic market. In addition, the feedstock Silicon metal has also been observed on the lighter side, thus negatively impacting the production cost of Silicone oil. In addition, the availability of finished stock of Silicone oil was adequate to meet the overall downstream demand, and as a result, the operating rates were reduced as manufacturers were cautious about building up excessive inventory in the domestic market. Furthermore, the German purchasing manager’s index declined from 43.2 in May to 41 in June, indicating a contraction in manufacturing and industrial activity. Therefore, prices of Silicone oil SC-85% 100 cst-3520/MT, FOB Hamburg, with a month-on-month decrement of 4.3% during June 2023.
For the Quarter Ending March 2023
North America
Silicone oil prices have continued their bearish rally in the USA market throughout the first quarter of 2023 on account of dull buying sentiments coupled with ample product availability in the region. In addition, imports from the Asian countries remained firm, thus leading to better material availability in the USA ports or domestic market. Also, rates for shipping containers from East Asia and China to the US edged lower amid gloomy demand. The demand for Silicone oil from the downstream automotive, construction, and pharmaceutical industries has remained sluggish. Market participants reported limited queries from the end-user. In addition, the purchasing manager's index dropped from 47.7 to 46.3 in March, signifying a contraction in both industrial and production activities. Therefore, the prices of Silicone oil CFR Houston were assessed at SC-85% 100 cst- 3750/MT during March 2023.
Asia- Pacific
Silicone oil prices have decreased in China throughout the first quarter of 2023, backed by low-cost pressure from feedstock Silicon metal prices along with a slower demand outlook for the product from downstream industries. In addition, the domestic production rate and cost of Silicone oil remained on the lower edge as the demand for the product remained sluggish from both the domestic and overseas markets. Furthermore, the decline in the placement of new orders was witnessed in the Chinese market as export volume dropped in the domestic market. Furthermore, China's manufacturing activity contracted in March, impacting the overall market dynamics of Silicone oil in the Chinese market. Thus, prices of Silicone oil FOB Shanghai were offered at SC-85% 100 cst-2800/MT during the last month of Q1 2023.
Europe
The prices of Silicone oil have continued their downward trend in the European market during the first quarter of 2023. This can be attributed to sluggish demand from downstream industries, such as cosmetics and automotive, due to ongoing holidays in the European markets. Additionally, imports into the European ports have been steady, as demand in the Asian market remains sluggish, and Asian exporters are taking advantage of better arbitrage opportunities by sending material onto European shores. As a result, there is ample material availability in the regional market, owing to firm imports and stable production rates. Moreover, the already bearish sentiment in the regional market has been further weakened by the recent US banking crisis and the latest Credit Suisse debacle. In contrast, the European region has witnessed a decline in PMI for March 2023, with the Eurozone Manufacturing PMI dropping to 44.7, representing a monthly dip of 3.6%, and remaining in contraction. Therefore, the prices of Silicone oil FOB Hamburg were settled at SC-85% 100 cst- 3750/MT during March 2023.
Prices of Silicone oil have gained a downward momentum in the US market throughout the fourth quarter of 2022, backed by the ample material availability in the domestic market and weak downstream demand. Furthermore, the sharp decline in freight charges resulted in cheap imported materials. In addition, the automotive industry's performance remained comparatively weak in the fourth quarter, limiting Silicone oil consumption. Meanwhile, the supply chain has operated normally, which leads to better material availability in the domestic market. Thus, after the conclusion of Q4, Silicone oil CFR Houston prices were assessed at SC-85% 100CST 3995/MT with a monthly declination of 7.4% during December.
Silicone oil prices remained under pressure in China throughout the fourth quarter of 2022. Demand from the downstream automotive, cosmetics, and pharmaceutical, along with other competitive industries, has remained on the weak side due to the sluggish consumer sentiment in the region. In addition, under the influence of persistent lockdown implementation and the zero covid policy, manufacturers have started facing a labor shortage coupled with supply chain disruption, which majorly pertains to logistical constraints. Furthermore, manufacturing activity declined in Q4 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. Thus, Silicone oil SC-85% 100CST FOB Shanghai prices were settled at 3305/MT during December.
Prices of Silicone oil have witnessed a downward trend in the European market during the fourth quarter of 2022. The latest decline in the prices was attributed to the steady inflows of cheap imported material from China, a key exporter of Silicone oil. In addition, demand from the downstream automotive, cosmetics, and pharmaceutical, along with other competitive industries, have remained weak amid sluggish buying sentiment in the region. Meanwhile, the threat of recession has eased in Q4. According to the data, inflation in Europe dropped from 10.1% to 9.2% in December 2022. In terms of domestic production, operating rates remained under check due to weak demand. Supply chain dynamics have improved in the European continent with no major port congestion, thus, facilitating the availability of imports and inter-European transportation, respectively. Thus, in Germany, prices of Silicone oil FOB Hamburg were assessed at SC-85% 100CST 3995/MT during December 2022.
