For the Quarter Ending June 2024
North America
In Q2 2024, the North American Silicone Oil market experienced a pronounced downtrend in pricing, driven by a confluence of factors that exerted downward pressure on market valuations. The quarter was marked by a persistent oversupply situation, particularly from Asian suppliers, coupled with moderating demand from key industries such as lubrication, cosmetics, and electronics. This imbalance was further exacerbated by significant plant shutdowns and disruptions, including the prolonged offline status of major silicone oil production units due to uncompetitive pricing and operational inefficiencies.
In the USA, the pricing landscape for Silicone Oil saw the most dramatic shifts. The overall trend was one of continuous decline, influenced by substantial de-stocking activities and a marked slowdown in procurement schedules. Seasonality also played a role, with the typically lower summer demand contributing to the bearish market sentiment. The correlation between these factors led to a significant price decline of 17% between for end-to-end quarter price comparison.
This quarter-ending price of USD 2100/MT for Silicone Oil (SC-85%) 100 cst CFR Houston underscores the negative pricing environment. The combination of excessive inventory levels, high transport costs, and subdued consumer demand created a challenging market scenario. The consistent downward pressure indicates a negative pricing environment, reflecting an overall bearish sentiment in the market.
APAC
In Q2 2024, the silicone oil market in the APAC region experienced a marked decrease in prices, driven primarily by several significant factors. Overproduction and high inventory levels have significantly pressured prices downward. Geopolitical tensions and logistical challenges, including port congestions and elevated freight costs, have further compounded the situation. As a result, the market has seen a bearish sentiment prevail. South Korea has been particularly impacted, with pronounced price declines. The overall trend in South Korea reflects a sharp decline in silicone oil prices, exacerbated by seasonal factors and a subdued economic environment. Q2’s ending price remained 17% below the Q1 ending price. The price decline was more prominent in the first half of quarter than the second half as few suppliers de-stocked their inventories after adjusting expectations. Moreover, the market faced additional strain from plant disruptions and temporary shutdowns, including key facilities operated by Dow and Wacker Chemie, which heightened supply chain vulnerabilities. Despite some stabilization attempts, the overall sentiment remained negative. The quarter ended with silicone oil prices at USD 1960/MT for 100 cst CFR Busan, reflecting the consistent downward pressure and challenging market conditions. This pricing environment underscores the need for strategic adjustments to manage overcapacity and logistical inefficiencies moving forward.
Europe
In Q2 2024, the Silicone Oil market in the Europe Region has been predominantly bullish, driven by a confluence of factors that have sustained an upward trajectory in prices. The surge in crude oil prices, which reached USD 89/Barrel in April, coupled with rising costs of upstream raw materials like chloromethane, has significantly impacted the production costs of Silicone Oil. Moreover, high electricity costs incurred in February and March continued to ripple through the inventory costs into the current quarter. The demand for Silicone Oil has been robust, particularly in the cosmetics and homecare sectors, buoyed by the onset of summer and the associated increase in discretionary spending. Additionally, elevated freight charges and persistent port congestion have further strained the supply chain, contributing to higher spot prices. Germany has experienced the most significant price fluctuations, underscored by a compelling rise in demand amidst stable supply conditions. The domestic market saw heightened activity due to the approaching travel season, with the cosmetics industry notably intensifying its procurement efforts. However, plant disruptions, such as Wacker Chemie’s Koeln site shutdown for over 14 days due to Rhine region flooding, also played a pivotal role in tightening supply and elevating prices. Seasonal demand trends have accentuated these dynamics, with the early part of the quarter seeing higher price rises than the latter half. Compared to the previous quarter, prices in Germany recorded a 1% rise, reflecting a stable yet assertive pricing environment. The end of the quarter saw a price of USD 3350/MT for Silicone Oil (SC-85%) 100 cst FOB Hamburg. Overall, the Q2 2024 period has been characterized by a positive pricing sentiment, propelled by robust demand, supply chain challenges, and elevated production costs.
For the Quarter Ending March 2024
North America
The North American Silicone Oil market experienced a bullish trend in the first quarter of 2024, despite some headwinds. Consumer demand for silicone oil remained stable, particularly in the electrical and consumer goods sectors. However, rising US mortgage rates and a slowdown in the EV market caused some concern about future consumer spending. Supply also faced challenges due to overstocked inventories and shipping container shortages caused by Red Sea attacks. This, combined with a global rise in feedstock costs, pushed prices up in January.
February saw a further increase in silicone oil prices despite signs of weakening demand, particularly in the industrial lubrication and pharmaceutical sectors. This price rise was primarily driven by supply disruptions caused by the Red Sea situation and a shortage of tankers on the Pacific route. By March, Chinese supplies came online and this helped stabilize supply in the US market. Silicone oil prices continued their upward trend, though at a slower pace, as demand remained moderate. Despite some inflationary pressures, the US Federal Reserve's neutral stance offered some stability to the market.
Overall, the North American Silicone Oil market in Q1 2024 navigated a complex interplay of supply chain disruptions, rising feedstock costs, and fluctuating demand. While initial price increases were strong, the trend slowed down by March as supply filled the gap.
Europe
The Silicone Oil market in Germany exhibited a complex interplay of supply and demand dynamics throughout the first quarter of 2024. Prices initially dipped in January due to high feedstock costs and subdued demand across various sectors like personal care and renewables. However, the situation reversed in February and March, with prices trending upward. Disruptions in the Red Sea, coupled with lower cracker operations, initially limited supply. Additionally, a global rise in ethane to ethylene premiums further pushed up feedstock costs. This, combined with improving demand, exerted downward pressure on prices in January.
Despite the initial price dip, positive indicators emerged in February. Inventories remained low due to supply disruptions, and demand showed signs of improvement, particularly in contact lens and nutritional chemical sectors. Furthermore, Evonik's positive outlook on Silanes (silicone oil derivatives) signaled a potential market upturn.
By March, silicone oil prices continued their upward trajectory, fueled by rising demand from the electrical and electronics industry. Supply also stabilized as production increased to meet export orders and shipping capacity expanded. German suppliers, however, faced challenges attracting Asian customers due to higher contract prices compared to weaker Asian demand. Overall, the Silicone Oil market in Germany navigated a period of price fluctuations in Q1 2024. While initial weakness stemmed from high costs and subdued demand, the quarter concluded with signs of recovery driven by rising demand and stabilizing supply.
Asia Pacific
The Korean Silicone Oil market experienced a period of gradual price increases throughout the first quarter of 2024. This trend emerged despite initial headwinds from high feedstock costs and subdued demand.
January saw modest price growth due to safety stocking and rising business activity. However, concerns about excessive Korean manufacturing capacity limited significant price increases. Lunar New Year celebrations in February further impacted supply, leading to inventory building and keeping prices down. Additionally, strong competition from Asian and European suppliers exerted downward pressure on Korean producer prices. By February, the market shifted as Chinese traders held onto higher stockpiles, reducing domestic supply in Korea. This, coupled with a global rise in feedstock ethylene prices, caused a price uptick in February. The situation continued in March, with Korean silicone oil prices further bolstered by rising demand from the electrical and electronics industry.
While overall demand remained moderate, there were signs of improvement in specific sectors like personal care, semiconductors, and EV markets. Currency fluctuations also played a role, with the Korean Won appreciating slightly against the US Dollar in February, making imports more competitive. However, the Won depreciated in March, potentially impacting future import costs. Overall, the Korean Silicone Oil market in Q1 2024 navigated a complex interplay of supply, demand, and currency factors. While initial weakness persisted, the quarter concluded with a bullish trend driven by tightening supply, rising feedstock costs, and pockets of improving demand.
For the Quarter Ending December 2023
North America
Prices of Silicone oil showed a bearish sentiment in Q4 FY2023. Prices turned bearish since October amidst high volume output of crude and natural gas. Feedstock pricing turned bearish as demand pressure turned negative. US manufacturing continued to remain subdued while recoveries were observed in the given timeframe.
Silicone oil supply largely remained imported with Europe forming substantial form. Lubrication market subdued in the given timeframe amidst lower demand from manufacturing while transport services saw uptick in demand. Inflation moderation has yet to stimulate demand from the consumer section largely owing to oversupply and high retail prices observed across USA, Canada etc.
Furthermore, financial burden due to high mortgage and rent charges continue to subdue consumer confidence for silicone oil markets. Furthermore, the quarter observed falling demand from EV and semiconductor demand with demand for insulating silicone oil derivatives subduing further. Market Participants like Wacker Chemie continue to reduce prices despite relatively high feedstock and energy prices to pull out the stocked materials with demand pressure turning further negative due to seasonality. Festive demand by the end of October remained lower than anticipated as consumers remained conscious of high interest rates despite inflation falling. By the end of quarter, CIF and CFR quotations for Asia turned on the higher end due to shipping container shortages and lower orders were observed with higher lead times as demand for silicone oil continue to show bearish sentiments.
Europe
Prices of Silicone oil showed a bearish sentiment in Q4 FY2023. Prices turned bearish since October amidst high inventories of natural gas reserves within Europe after aggressive purchases for the Winter. Feedstock pricing turned bearish as demand pressure turned negative. Eurozone manufacturing continued to remain subdued in the given timeframe after nine consecutive contractions. Silicone export orders remained subdued amidst weakening of exports to Chinese and APAC regions largely owing to slower recovery and major downturns undertaken during the given timeframe. Lubrication market subdued in the given timeframe amidst lower demand from end use transport services as private transportation remained subdued amidst high consumer gas and gasoline prices in Europe. Inflation moderation has yet to stimulate demand from the consumer section largely owing to oversupply and high retail prices observed across Belgium, Netherlands etc. Furthermore, financial burden due to high mortgage and rent charges continue to subdue consumer confidence for silicone oil markets. Furthermore, the quarter observed falling demand from EV and semiconductor demand with demand for insulating silicone oil derivatives subduing further. Market Participants like Wacker Chemie continue to reduce prices despite relatively high feedstock and energy prices to pull out the stocked materials with demand pressure turning further negative due to seasonality. Festive demand by the end of October remained lower than anticipated as consumers remained conscious of high interest rates despite inflation falling. By the end of quarter, CIF and CFR quotations for Asia turned on the higher end due to shipping container shortages and lower orders were observed with higher lead times as demand for silicone oil continue to show bearish sentiments.
Asia Pacific
Prices of Silicone oil showed a bearish sentiment in Q4 FY2023. Prices turned bearish since October amidst high inventories and lower demand sentiments. Feedstock pricing turned bearish as demand pressure turned negative. Chinese manufacturing showed expansion stabilizing prices in the month of November and December. Lubrication market subdued in the given timeframe amidst lower demand from end use transport services remained high in East Asian markets. Inflation continues to remain subdued in Chinese markets amidst high financial debts consumers due to real estate crisis which has yet to stimulate demand from the consumer section. Furthermore, financial burden due to high mortgage and rent charges continue to subdue consumer confidence for silicone oil markets. Furthermore, the quarter observed falling demand from EV and semiconductor demand with demand for insulating silicone oil derivatives subduing further. Chinese and Japanese markets are observing lower EV demand largely owing to falling export demand to Europe for semiconductors and EV due unfavorable credit situation. Festive demand by the end of October remained lower than anticipated as consumers remained conscious of high interest rates despite inflation falling. By the end of quarter, CIF and CFR quotations for Asia turned on the higher end due to shipping container shortages and lower orders were observed with higher lead times as demand for silicone oil continue to show bearish sentiments.
For the Quarter Ending September 2023
North America
Prices of Silicone oil showed a bearish sentiment in Q3 2023. Silicone oil feedstock followed bullish sentiment in the given quarter. Prices of SILICONE OIL continued their bearish trend in July due to weak demand sentiments and oversupply. Demand of SILICONE OIL from construction sector continues to stay muted in the month of July as US Fed hiked interest rates again discouraging sales, with price declining significantly reflecting weak chemical margins of major SILICONE OIL producers like Dow. As prices continued to drop by the end of July, consumption in the retail sector picked up as inflation moderated to 3%. Global semiconductor PMI index continue to show contraction which further continue to reduce demand of Silicone oil. Manufacturers continued to push the price down the value chain despite weakening demand to maintain a positive cash flow and deteriorating chemical margins. As inflation soared again, major destocking of silicone oil was observed as construction and real estate continues to build up large inventories. September was characterized by weak demand sentiment reflected in falling freight charges across Atlantic and pacific. SILICONE OIL Prices continued to observe bearish trend despite OPEC+ price hikes, USA’s gas procurement and Chinese aggressive procurement strategies for the month. PMI electronics in US continues to remain contracted with signs of recovery observed in September. Demand forecasting projects muted demand in Q4 and gradual recovery expected in FY 2024.
Asia Pacific
Prices of Silicone oil showed a mixed sentiment in Q3 2023. In July, prices continued to decline due to global price decline in feedstock, deflating energy prices and weak demand in Asia Pacific. Supply of Silicone oil continued to remain higher as major consumers like construction and semiconductor continues to stay muted. Supply disruptions due to cyclones and plant failures created price fluctuations in the regional market. Input cost escalations were observed across the value chain in Asia Pacific due to high import dependency from Europe. Progressing into August and September, Chinese markets saw a bullish sentiment on the account stimulus injected into economy and rise in procurement activities. Feedstock prices rallied strongly as Chinese procured significant amount from the global market pushing up the prices in Silicone oil. PMI showed improvement in newer orders, positive manufacturing output and seasonal increment in demand made commodities market in China bullish. In August and September, chemical margins of major chemicals showed improvement in Asia pacific on the back of improved price realization and sales volume. Demand of SILICONE OIL based lubrication and intermediate chemicals continue to remain weak despite bullish sentiment in China as they oversupplied the domestic market. Energy prices rose in August forcing manufacturers to hike up the SILICONE OIL prices while the downstream plastics prices declined due to weak demand for higher inventories. Caixin PMI recorded expansion in Chinese manufacturing output in September while newer orders fell again on the back of rising inflation and weakening global demand. Labor market in China and East Asia continued to remain tight with service sector expanding at a slower rate affecting demand of silicone oil based goods in a negative trend especially in retail sector in the month of September indicating weaker growth momentum in the next quarter. Demand forecasts for Silicone OIL derived goods continue to show weak prices as European and American consumption is expected to fall due to winter drop.
Europe
Prices of Silicone oil showed a mixed sentiment in Q3 2023. In July, SILICONE OIL maintained a bearish stance as demand continues to stay muted. Supply largely remained domestic and inventories were maintained at the lower end due to tightening of labor market and rising management cost. Energy prices continued to show deflation in the month of July. Cash flows in the value chain of SILICONE OIL was maintained through stable demand from retail business despite weakening consumer sentiment. Manufacturing continues to stay muted in the entire quarter as PMI continues to record contraction. Construction sector observed a demand drop with house prices, according to Halifax House Index, falling by 5% in UK. In the months of August and September, we see rising interest rates by European Central Bank to curb consumption and bring inflation below 2%. Chemical margins deteriorated, and trade volumes continued their bearish trend between Asia and Americas. Sales volume in electronics continues to fall on a Month-on-Month basis across Europe. Operating rates continue to remain in the range of 65-75%. Gas prices began their bullish trend forcing manufacturers to reduce operating rates and pushing up the prices of SILICONE OIL derived products down the value chain. CEFIC projects significant buildup of inflation in feedstock and basic chemicals are going to pose significant challenges to the Silicone oil and other chemical pricing with inflated prices staying longer in the economy causing very slow recovery.
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.
For the Quarter Ending December 2022
North America
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.
Asia-pacific
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.
Europe
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.
For The Quarter Ending September 2022
North America
In the North American region, the market dynamics of Silicone oil followed an upward trend throughout the third quarter of 2022. High raw material Silicon metal prices have resulted in the high production cost of Silicone oil in the regional market. In addition, demand from the downstream automotive industries has remained stable to weak amid high inflation. On the other side, labor shortage, logistic constraints, and port congestion on the US Gulf coast and East coast have further worsened the supply dynamics and thus caused the limited availability of the product in the domestic market. Consequently, prices of Silicone oil in the USA (SC-85%) 100 CST CFR Houston were assessed at USD 4615/MT during September.
Asia- Pacific
Silicone oil prices have continued to rise in the Asia- Pacific region throughout the third quarter of 2022. Silicone oil prices increased due to the high-cost pressure while demand from the downstream automotive and allied industries has remained stable. On the other hand, the high raw material Silicon metal has another other reason for the price increase. In China, the market faced stoppages due to a resurgence in covid cases, which not only hampered production and trading activities but also obstructed supply chain dynamics, resulting in the limited availability of the material in the regional market. Therefore, after the conclusion of Q3, Silicone oil prices in China (SC-85%) 100 CST FOB China were assessed at USD 3715/MT.
Europe
Prices of Silicone oil have continued their bullish rally in the European region during the third quarter of 2022, supported by the high cost of raw material Silicon metal cost. The domestic cost of production remained high amid soaring energy and operating costs, resulting in weak output. Although, the speculation of recession across Europe has dampened the demand from the downstream automotive industries. According to Eurostat, inflation in Europe has increased from 7.1% to 10.1% during September. On the other side, the supply chain has been disrupted amid port congestion, vessel bunching, and labor strike, which halted the supply flow of Silicone oil and limited the material available in the market. Thus, prices of Silicone oil in Germany SC-85%) 100 CST FOB Hamburg were assessed at USD 4665/MT during September.
