Silicone Rubber Costs Spiked Amidst Growing Demand from Downstream Industries

The price of the Silicone Rubber witnessed a notable surge in February. This surge in the Silicone Rubber price is majorly attributed to the increase in the price of the feedstock majorly Silicon Metal. The downstream Automobile market performance also witnessed a surge in the overall European and the US market. The supplier’s activities of the absolute dumping from past few sessions have resulted into a marginal accumulation or with respect to the price correction of the Silicone Rubber. These key factors have majorly affected the price of the Silicone Rubber throughout the respective markets.

In the European market, particularly in Germany, there has been a notable increase in Silicone Rubber prices in February, reaching 9500 USD/MT DDP-Hamburg, indicating a rise of 3.26%. In the downstream Automobile market, despite a rise in German car sales in February, partly due to an extra leap year day, the demand for electric models experienced a decline. However, there was an overall positive trend with a 1.77% month-on-month increase, totaling 217,388 new cars hitting German roads in February, representing a 5.4% rise compared to the same month a year ago, as reported by the KBA federal transport authority. Meanwhile, the German construction sector remained in contraction territory during the opening quarter, although there were signs of easing in the rates of decline in activity, new orders, and employment. The Construction PMI in Germany increased from the past five months but stayed below the threshold limit in February. Despite these improvements, the construction sector continued to face challenges due to a lack of new work, driven by factors such as client uncertainty, price pressures, and overall economic weakness. In contrast to the challenging market conditions in some sectors, the Aerospace sector experienced positive sales growth. These various market dynamics have significantly influenced the demand for Silicone Rubber in the European market.

In the US market, Silicone Rubber prices have seen a significant increase in February, reaching 9600 USD/MT FOB-USGC, marking a notable increment of 3.22%. The downstream Automobile market in the US has displayed resilience, as Light Vehicle (LV) sales experienced a substantial 9.2% year-on-year growth and a remarkable 16.36% increase on a month-on-month basis in February, totaling 1.25 million units. Simultaneously, the Construction sector has also demonstrated outstanding performance during the same period. The Manufacturing Purchasing Managers' Index (PMI) witnessed a significant upswing in February, indicating positivity in overall industrial activities. These robust activities in the automotive and construction sectors have played a pivotal role in influencing the demand for commodities, consequently impacting Silicone Rubber prices. This observation underscores the intricate connection between market demand and raw material costs, particularly in the context of the Silicone Rubber market in the US.

As per the ChemAnalyst anticipation, the price of the Silicone Rubber is expected to showcase a bullish trend in the upcoming sessions. This anticipation is majorly attributed to the expectation of increase in the demand from the core sectors like Automobile and Construction. The expectations of an increase in the Silicon metal price along with the supplier’s activeness in accumulation of inventories will also be the key factor in driving the price of the Silicone Rubber in near future.