The Newly Added Capacity in the Early Stage Stabilized and Released; Domestic Silicone DMC Production Increased Slightly in December [SMM Analysis]

Published: Dec 31, 2024 10:33

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[SMM Analysis: Stable Release of Newly Added Capacity in Early Stage, Domestic Silicone DMC Production Increased Slightly in December] According to SMM statistics, domestic silicone DMC production in December increased 2.95% MoM and was up 17.37% YoY. The high operating rate of domestic silicone DMC production in December was mainly due to the release of newly added monomer capacity, combined with relatively small reductions in operating rates by other monomer enterprises. Additionally, the current market pressure had little impact, leading to limited willingness among monomer enterprises to reduce operating rates.

SMM, December 31: According to SMM statistics, domestic silicone DMC production in December increased by 2.95% MoM and was up 17.37% YoY. In December, domestic silicone DMC operating rates remained high, with production continuing to increase slightly due to the release of new monomer capacity combined with relatively small reductions in operating rates by other monomer enterprises. Additionally, the current market pressure had a limited impact, and monomer enterprises showed little willingness to reduce operating rates. Figure DMC Monthly Production Overview Specifically, in terms of production, December DMC production continued to increase slightly. SMM learned that during December, new capacity from monomer plants in Shandong and Zhejiang further ramped up production, while monomer enterprises in Hebei increased operating rates to full capacity. Although monomer plants in Hubei slightly reduced production starting mid-December, the overall industry operating rates continued to rise. Furthermore, despite downstream enterprises showing average order-taking performance after monomer enterprises' joint efforts to refrain from price cuts, the current inventory levels of monomer enterprises remained limited. With relatively low supply pressure, enterprises showed little willingness to reduce operating rates, collectively leading to a continued increase in production. On the demand side, recently, domestic downstream enterprises began planning for holiday shutdowns, with some adhesive companies already on holiday. While downstream operating rates declined, procurement volumes did not decrease due to the holiday shutdowns. Many enterprises maintained a bullish sentiment on post-Chinese New Year prices, leading to pre-holiday stockpiling. Although trading volumes did not increase significantly, they also did not show a noticeable decline, providing some support for trading volumes. Regarding the production schedule forecast for January, SMM expects production to decrease slightly. This is due to the impact of declining downstream operating rates and increased willingness among enterprises to conduct appropriate production line maintenance during the Chinese New Year. January operating rates are expected to decline slightly, but no large-scale shutdowns are anticipated for now, so production is expected to remain at a high level.

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