Partial Tariff Cancellation in Trade War Brings Positive Impact, Demand for Silicone High-Temperature Adhesives Expected to Rise [SMM Analysis]

SMM May 15 News: According to SMM, this week, there has been a phenomenon of bulk procurement in the domestic high-temperature adhesive downstream and other fields. The main reason is that after the conclusion of the Geneva Economic and Trade Talks this week, the substantial tariff increases in the Sino-US trade war that began in April have been largely cancelled. As of now, 71% of the 125% tariffs imposed since April have been cancelled, and 24% have been suspended. With the implementation of this agreement, silicone end-use products will enter a favorable stage.

Figure: Price Trend of Silicone Products

Starting this week, downstream enterprises of high-temperature adhesives have begun to enter the market for procurement due to the tariff cancellations. Most enterprises have indicated that they plan to appropriately resume foreign trade within the 90-day window period. Meanwhile, overseas orders have also increased recently, and the support for some silicone end-use products has gradually strengthened. Additionally, the inventory of raw materials for mixing rubber has basically bottomed out, and it is planned to start orderly procurement in the market next week. In mid-to-late May, the market trading volume is expected to recover at an accelerated pace. Moreover, the recent effect of destocking at low levels for monomer enterprises has been moderate. On the supply side, although the operation of monomer enterprises in North China, Southwest China, and other regions has recovered to some extent in the early stage, monomer enterprises in north-west China are still in the maintenance cycle. In the short term, the supply will mainly maintain a fluctuating trend, and the pressure of inventory accumulation will weaken.