Most Silicone Product Prices Post Increases after CNY Holiday

SHANGHAI, Feb 2 (SMM) - After the Chinese New Year (CNY) holiday, SMM DMC prices stood at 16,800-17,300 yuan/mt, up by 100 yuan/mt on average. 107 silicon rubber prices were 17,000-17,600 yuan/ton, up by 150 yuan/mt on average. The prices of methyl vinyl silicone rubber rose 100/yuan to 17,500 -18,000 yuan/mt, while silicone oil prices held firm at 19,000-20,000 yuan/mt.

The prices of silicone products got off to good start, with some monomer companies hiking their offers. For example, monomer factories in Shandong raised the prices of DMC, 107 silicone rubber and methyl vinyl silicone rubber by 200 yuan/mt, 300 yuan/mt and 200 yuan/mt respectively. In addition, DMC prices in Zhejiang also rose by 200 yuan/mt.

According to SMM survey, the monomer plants hiked the prices primarily on the upcoming traditional peak season. The enterprises in real estate sector, the end consumption of silicone, will resume operation after the Lantern Festival on February 5, which will contribute to a significant increase in the demand for silicone products. Therefore, the prices of silicone products have inched up in advance. 

On the demand side, the purchases of 107 silicone rubber have picked up post the CNY holiday, and it is expected that the demand will be stronger in February.

On the supply side, some monomer plants increased their operating rates of after the holiday to be well positioned for the high season. Plants in Yunnan and Inner Mongolia took the lead to ramp up the capacity, and the output in Xinjiang and Zhejiang is forecast to grow as well with the release of new capacity. SMM estimates that the average operating rate of monomer plant will rise to 78% in February. 

The positive news for the real estate sector from governments and real estate enterprises have finally trigger a recovery in terminal consumption, which bodes well for the silicone industry chain. However, SMM also notices that although silicone prices are on the rise with recovering demand and moderate inventory, the priority should be given to restoring previous losses. The demand might fail to catch up if the prices are overly hiked.

To sum up, SMM expects that the silicone prices will strengthen in February, but a surge will be unlikely since the demand recovery is slow. SMM estimates the DMC prices to peak at about 18,500 yuan /mt.