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Chemical Raw Materials Skyrocketing! Is the Hike of Precipitated Silica by 28 Per Ton Just the Beginning?
Created on 09.16
Chemical Raw Materials Skyrocketing! Is the Hike of Precipitated Silica by 28 Per Ton Just the Beginning?
Coal, Natural Gas & Soda Ash Surge, In-depth Analysis on Market Trend
The chemical circle is buzzing: precipitated silica has raised its price again, with a price increase of 100-200 CNY per ton. Food-grade and toothpaste-grade silica follow the uptrend sharply.
Many buyers assume manufacturers are raising prices arbitrarily, but this is only the tip of the iceberg of the global raw material boom. Driven by surging energy prices, tight supply, geopolitical disruptions and extreme weather, the whole industrial chain is facing cost restructuring.
Why Are Global Chemical Prices Rising Sharply?
This round of price hike results from four overlapping factors: energy, raw materials, supply contraction and climate risk.
1. Energy Cost Jumps: Coal, Natural Gas and Crude Oil Stay High
Chemical manufacturing is energy-intensive. Once energy prices climb, the overall cost baseline rises immediately.
Coal breaks the seasonal pattern and rallies out of season. Power coal price hikes directly push up steam and electricity expense. Silica production consumes massive energy, and energy accounts for over 30% of total manufacturing cost.
Asian LNG spot price remains volatile at a high level. A large number of European chemical plants have been shut down permanently, tightening global supply. Crude oil also lifts the cost of petrochemical feedstocks.
2. Key Raw Materials Rally: Soda Ash & Sulfuric Acid Push Up Cost
Soda ash and sulfuric acid are core feedstock for precipitated silica.
Soda ash rebounds strongly backed by higher coal price. Every 100 CNY/ton rise of soda ash will lift the cost of sodium silicate, and finally bring about 30-40 CNY/ton cost increase for silica. Sulfuric acid price also rebounds due to sulfur price growth and reduced smelter acid output.
3. Supply Side Shrinkage: Low Inventory & Capacity Phase-out
It is not explosive demand, but limited available capacity that amplifies price fluctuation.
In China, approval for high-emission & high-energy-consuming chemical projects slows down, outdated capacity exits continuously. Downstream customers keep raw material inventory at a low level. Once seasonal stocking begins, price elasticity surges.
Overseas, European chemical capacity keeps exiting, balancing global chemical supply. Multiple global chemical giants issued price increase notices, further lifting market sentiment.
4. Extreme Weather Adds Uncertainty
Extreme weather weakens hydropower output and pushes up electricity prices, further increasing energy expenditure for high-energy-consuming chemical factories.
Why Precipitated Silica Price Must Go Up? Hard Logic of Cost Transmission
The 100-200 CNY/ton price rise is not speculation, but a passive response to rising costs.
Cost Composition of Precipitated Silica
• Raw materials (sodium silicate, sulfuric acid): ~50%
• Energy (coal, steam & power): ~30%
• Labor, depreciation & logistics: ~20%
Soda ash, sulfuric acid and coal all climb at the same time, squeezing profit margins of manufacturers. Low-end production lines are nearly at break-even point.
Market Differentiation
Ordinary industrial-grade outdated capacity is phased out, while compliant food-grade, pharmaceutical grade and toothpaste-grade silica capacity expands slowly. Demand stays stable, keeping supply and demand in tight balance. High-dispersity silica maintains strong premium.
Export Demand Supports Domestic Pricing
There is a price gap between China, Europe and US silica market. Chinese precipitated silica still holds obvious cost advantage, attracting continuous overseas orders and supporting price adjustment.
Future Market Outlook for Silicon Dioxide
1. Short term (3-6 months): Hard to fall, upward momentum remains
High energy cost provides solid support. Downstream tire, coating and food additive industries enter peak stocking season. Industrial silica still has room for further price increase; food & toothpaste grades will see larger gains.
2. Medium term (6-12 months): High-level fluctuation, sharp drop unlikely
New capacity release is limited. The overall tight supply pattern will not change quickly. Even if crude oil and energy see mild correction, silica price will stay at elevated level.
3. Long term (1-2 years): Market differentiation intensifies
Ordinary industrial-grade silica price will stabilize after capacity elimination. Food-grade, pharma-grade and specialty precipitated silica will keep premium. Production lines with low-carbon & low-energy technology will gain stronger competitiveness.
Market Impacts & Procurement Suggestions
• Upstream raw material suppliers: Benefit from price rally with improved profit.
• Midstream manufacturers: Bear heavy cost pressure. Formula optimization and production efficiency upgrade become essential.
• Downstream end users: Terminal consumption recovers slowly, making cost transfer difficult and squeezing profit.
For buyers: Lock medium & long-term contracts for food grade and toothpaste grade silica to hedge price volatility. Cooperate with reliable compliant manufacturers for stable quality and secure supply. Build reasonable safety stock before peak season to avoid sudden price jump and extended lead time.
Final Takeaway
This round of chemical price hike is not short-term speculation. It comes from global energy restructuring, supply contraction and rising production costs. As a fundamental industrial raw material, silicon dioxide cannot stay immune.For industry practitioners, do not bet on sharp price drop. Focus on cost control, secure stable capacity and optimize product portfolio to survive this market cycle.
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