2022 China DMC Market Price Variation Triggered by Cost, Supply & Demand
Keywords: 3060 carbon ambition, fresh silicone monomer capacity, high primary-form polysiloxane exports
Introduction: DMC, as the basic feedstock of the silicone industry chain, has a strong price co-movement with downstream products and plays a significant role in the industry chain. In recent years, China’s DMC market has witnessed sharp ups and downs, so impacts from seasonal and regular factors have ebbed. Complex and changeable price drivers make it difficult to make the market forecast. The following analysis will mainly focus on prices drivers of DMC and future changes in these drivers, in a bid to elaborate the DMC market development in 2022.
Related analysis for DMC price driver changes
Remarks: The closer the correlationcoefficient is to 1, the stronger the positive correlation is. The closer it isto -1, the stronger the negative correlation is.
In recent years, cost and supply-demandrelationship are the main drivers affecting the DMC price. SCI analyzes thecorrelation between the supply (output, inventory at silicone monomer enterpriseand import volume), demand (consumption volume and export volume), cost(methanol and silicon metal 421 prices), and the DMC price.
In the positivecorrelation relationship, the correlation between feedstock price and DMC priceis the highest, which also shows that the price change in the feedstock isconsistent with the price change of DMC. From the data in the past five years,the correlation coefficient was 0.78-0.80. In 2021, this positive correlationbecame more obvious, and the correlation coefficient was close to 1, which tookcues from the supply crunch of metal silicon in H2, 2021
The positive correlation between exportvolume and DMC price is also relatively strong. According to the data in thepast five years, the correlation coefficient was 0.61. From the Y-O-Y change ofDMC price and export volume, the Y-O-Y change of DMC annual average price andexport volume in most years remained highly consistent except 2020 which washit by the COVID-19 pandemic. In the negative correlation relationship, theinventory at silicone monomer enterprise had the highest correlation with theDMC price. High inventory at silicone monomer enterprise triggered off declinesin the DMC price. This can also be verified from the Y-O-Y change trend of bothin Table 3, and it is another important indicator to impact the change in the DMC price.
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