SMM Review of DMC Prices in 2022 and Forecast in 2023

SHANGHAI, Jan 10 (SMM) - In the first quarter of 2022, DMC was in a large supply deficit due to the peak season and the maintenance of companies. In early March, the prices burgeoned to the highest level of 2022. However, from the second to the fourth quarter, DMC prices trended lower as the demand from real estate, electronic appliances and other sectors shrank. The prices remained low from June to December 2022.
1. From January to February 2022, DMC supply was tight owing to the peak season and the maintenance of silicone companies after the Chinese New Year. Overseas demand also continued to improve, which expanded the supply deficit and further hiked up the DMC prices.

2. COVID-19 broke out repeatedly from March to June 2022. Since March 2022, some enterprises, especially in Zhejiang and Guangdong, had suspended their production due to COVID-19 control measures. Companies in other regions had to consume their in-plant inventories of raw materials amid the COVID-19-related transportation restrictions. In addition, in the second quarter, output released by the new production capacity owned by domestic monomer enterprises grew, resulting in an imbalance between supply and demand, thus DMC prices fell to below 21,000 yuan/mt.

3. From July to December, DMC prices trended lower. The demand shrank amid the poor terminal consumption, but monomer manufacturers which cut their output ramped up their production slightly. The downstream companies only purchased on rigid demand, which sent the DMC prices into a nosedive to 16,300 yuan/mt in December, a new low in 2022.

In 2023, the DMC demand from terminal sectors such as real estate and electronic appliances will keep dropping under the influence of the COVID-19 outbreaks and the overall economic environment, and the overall demand from sectors such as new energy, photovoltaics and wind power will remain low. The year will witness more new silicone capacities put into production, hence the market will be in a supply surplus in 2023. SMM believes that in 2023, the silicone prices will mainly move rangebound with some downward potential. In the first quarter of 2023, DMC prices will grow slightly supported by bullish news from the real estate industry.