Silicon metal, the material used to make silicone, is mainly found in China. Unfortunately, supply cannot keep up with demand and new tariffs will make it even more costly for U.S. silicone producers to get their hands on the raw materials.
Due to tariffs, the price has almost doubled for silicone metal, and this hurts the market because 60 percent of the global supply of silicone comes from China.
In May, Sun Chemical’s prices were raised by 30 percent on all their silicone based products. Sun Chemicals is the largest producer of printing inks and pigments in the world.
“The ongoing silicone shortage has caused our suppliers to continue increasing prices beyond anything we have seen in recent years,” said vice president of Sun Chemical, Dennis Sweet. “While Sun Chemical has utilized all its resources to offset these shortages and increases, we need to pass some of these increases on.”
Sun Chemicals isn’t the only one seeing price increases in the industry. According to the Alexander Watson Associates’ annual survey of industry professionals, the concern for the availability of raw materials is high among members of the industry. In addition, all respondents of the survey said they experienced cost increases throughout 2017, and most of them expect the costs to continue to rise throughout all of 2018.
In early 2017, Momentive workers began a strike that shut down the silicone manufacturer for over two months. On top of that, they also shut down silicone production in their Germany facility.
“Silicone facilities worldwide have fallen behind necessary demand,” said Alex Sechi, a senior account manager for BRB International B.V., a producer of silicone. “The demand has increased all over the world.”
Unfortunately, there is little hope for a decrease in pricing for silicone.
“We know this is not a short-term problem,” said Zack Beier, director of purchasing at Q Holding Co, a manufacturer of silicone products. “There’s not one single constraint that can be remedied to solve the industry’s problems.”
The silicone market is expected to be extremely tight for the next two years and the price increases show this.
As for adhesives, raw materials is on the rise. Propylene price is up by 50% since 2016 and methyl methacrylate is up by 10-20% since 2016.