New Capacity Release Combined with Restart of Idle Facility Drives Significant Increase in Domestic Silicone Production in November [SMM Analysis]

According to SMM statistics, domestic silicone DMC production in November increased by 10.36% MoM and was up 27.06% YoY. The significant production increase in November was mainly due to the ramp-up of new capacity from domestic monomer companies and the resumption of idle capacities in Zhejiang in mid-to-late November, thus leading to a rise in the operating rate of monomer plants.

Specifically, November saw a shift from a production decrease to a substantial increase. SMM found that the increase was driven by the full-scale ramp-up of new capacity at Shandong monomer plants, which boosted production. Additionally, production lines at Zhejiang monomer companies, previously halted due to accidents, fully resumed in mid-to-late November. Furthermore, domestic monomer companies operated normally in November with no significant shutdowns for maintenance, resulting in a slight increase in the overall operating rate and a comprehensive increase in production.

On the demand side, recent domestic end-use demand has been generally modiocre. The real estate sector saw a decline in operating rates due to lower outdoor temperatures, significantly weakening demand for silicone. Demand for silicone oil also saw a slight decrease. However, as downstream companies' inventories from previous restocking were digested, domestic downstream companies began to make just-in-time procurement this week, leading to a recovery in market trading volume.

For the production schedule forecast for December, SMM expects production to continue increasing. There are no large-scale maintenance shutdowns planned for December, and operating rates are expected to remain stable. However, the operating load of new facilities in Shandong and capacities in Zhejiang is expected to increase further in December, leading to a continued rise in industry production. SMM forecasts that domestic silicone production in December will rise to around 230,000 mt.