Crude Silicone Monomer Production Likely to Fall 8,000 mt due to Unexpected Maintenance

SHANGHAI, Sep 1 (SMM) - Hubei Xingfa Chemicals Group Co. announced on August 31 that its wholly-owned subsidiary, Hubei Xingrui Silicon Materials Co., Ltd., in order to ensure the stable and safe operation of its 200-mt circulating fluidised bed boiler, has decided to shut down the facility for maintenance for a period of 45 days.

It is reported that the boiler provides steam for the Yichang New Materials Industrial Park, and the maintenance will disrupt the steam supply. It is estimated that the output of glyphosate will fall 10,000 mt, crude silicone monomers drop 8,000 mt, and glycine contract 4,000 mt

At the same time, Xingfa Chemicals also mentioned that the maintenance is expected to have a certain impact on the company's operating performance in 2022. The Company will do a good job in this round of maintenance under the premise of ensuring safety, and strive to resume the production as soon as possible.

The SMM Price showed that the spot price of silicone DMC has been on the downward trend since March 17. As of September 1, the spot price of DMC has dropped to 18,800-19,800 yuan/mt, with an average of 19,300 yuan/mt.

Regarding its fundamentals, according to recent research by SMM, the operating rates of manufactures rose slightly compared with last week. The main reason is that the monomer factories in Hebei province have completed the overhaul, while those in Xinjiang are about to resume the production with local pandemic has been brought under control. The imports of silicone oil in July stood at 8,300 mt in July, down 6.67% MoM and 11.58% YoY. The imports in the first seven months in 2022 totalled 59,200 mt, down 27.8% YoY. 

On the demand side, affected by the sluggish consumption of real estate and electronic appliances, the arrival of traditional seasonal high in September and October has not sounded the rallying call for downstream restocking, and the market's wait-and-see sentiment is still strong. Meanwhile, the exports of silicone oil in July recorded 42,500 mt in July, down 12.9% MoM. The exports in the first seven months in 2022 totalled 248,700 mt, up 59.7% YoY. In terms of market quotes, monomer factories lowered the prices across the board to stimulate downstream demand, with prices of DMC falling to 18,800-19,800 yuan/mt. 

Looking ahead, SMM believes that the supply of silicone is expected to pick up after the manufacturers in Hebei complete the maintenance and the pandemic situation in Xinjiang improves. In addition, the production of #421 silicon metal is also expected to recover when the power rationing in Sichuan province ends, weakening the cost support to silicone prices. Therefore, DMC prices are likely to remain stable as a whole with occasional drops in the near future.