Entering May, the silicone market is expected to kick off a new round of market movement amid a high-level consolidation pattern. Looking back at April, affected by voluntary emission reduction across the industry and reduced operating loads at multiple monomer plants, the supply of DMC gradually tightened. Meanwhile, methanol prices remained high on the cost side, providing strong market support and driving DMC prices to move steadily upward.
As of April 30, DMC was quoted at 14,700–15,500 yuan per ton, up 700 yuan per ton month-on-month, representing a growth rate of 4.83%. The average market price in April stood at 14,870.75 yuan per ton, rising 3.78% month-on-month from March and 10.71% year-on-year.
At the same time, continued low operation rates of production units have led to a notable shortage of by-products from monomer manufacturers. Prices of Methyl Chloride, Trimethyl Monomer and Hydrogen-containing Monomer surged sharply, which in turn drove continuous price hikes of supporting additives such as silicone ether and fumed silica.
Affected by the price transmission of multiple raw materials, bullish sentiment among midstream and downstream players heated up again in late April. Many enterprises made phased inventory replenishment before the holiday, with stockpiles sufficient to last until the end of May. However, end-users showed limited acceptance of price increases with a slow follow-up pace. Coupled with squeezed profit margins, the market remained cautious about large-scale stockpiling.
Overall, order backlogs of monomer manufacturers have generally extended to the end of May. With the resumption of industry conferences after the holiday and a tight supply-demand balance, a new round of price increases in the silicone market is poised to start. Having built up certain inventories before the holiday, midstream and downstream participants will maintain an upward quotation trend to boost transactions.
Nevertheless, actual transactions at the new price levels will take time to be fully absorbed. After nearly half a year of supply and demand adjustment, upstream price adjustment has formed a regular pattern: overall price hikes are usually launched at the beginning of each month, followed by a period for market digestion, keeping the overall market on a steady rising track. Even if individual manufacturers offer slight temporary discounts to boost sales occasionally, it will not substantially impact the overall market trend.