Multiple Chemical Companies Significantly Raise Organic Silicone Product Prices or Pass Costs to Downstream Industries; "Caviar Essence Cream" Officially Announced Price Increase

Recently, due to the impact of the Middle East situation, many chemical companies have announced price increases for silicone products.

Silicone is a widely used chemical, and the rising prices of upstream products will also affect the entire industry chain, including cosmetics, which may face price hikes.

On March 24, Germany’s Wacker Chemie suddenly announced that it would raise the prices of silicone products starting April 1. In a statement, Wacker Chemie said the price increase was due to the severe disruption of the global supply chain caused by military conflicts in the Middle East, leading to significant increases in energy, raw materials, and logistics costs.

First Financial learned that Wacker’s silicone is one of the world’s largest producers, supplying over 2,800 highly specialized silicone innovative products. These products are widely used in automotive, construction, chemical, cosmetics, medical technology, energy and electronics, papermaking, and textiles. By 2025, Wacker Chemie’s silicone business is expected to contribute about half of the group’s revenue.

Wacker Chemie has not disclosed the specific extent of the new price adjustments but stated that the price increases will vary across different products. The sales team will communicate with customers soon to provide detailed information about products and business.

Wacker is not the first silicone manufacturer to adjust prices. Earlier this month, Dow’s Consumer Solutions division announced a price increase for its products in Greater China, effective March 27. This division mainly focuses on silicone products. The company expects the price increase to be between 5% and 15%.

The upward trend in silicone prices was evident even before the outbreak of the Middle East conflict. In November last year, Dow Chemical raised prices of several core silicone products by 10% to 20%. In January this year, Dow also increased prices for its high-performance building products by 5% to 10%.

At the end of January, Wacker Chemie announced that starting February 1, it would raise prices on its main silicone products by at least 25% to cope with the sharp rise in commodity prices.

Silicone products include silicone oil, silicone emulsions, silicone resins, silicone elastomers, sealants, silanes, silane-modified polymers, and fumed silica. For example, silicone oil is used in personal care products like shampoo.

Recently, due to rising raw material costs upstream, some cosmetics companies have announced price increases. German cosmetics giant Beiersdorf’s premium skincare brand La Prairie said it would raise prices on some products in the Chinese market in April, with increases ranging from 3% to 5%. La Prairie’s products are priced from several thousand to over ten thousand RMB.

Regarding this round of silicone price hikes, a senior R&D professional in the chemical industry told First Financial that since the beginning of the year, silicone prices have been rising influenced by exchange rates and other factors, and the worsening Middle East situation has further increased costs. He also mentioned that cosmetics might take the opportunity to raise prices, although the raw material costs in cosmetics account for a relatively small part of the overall product cost.

“Although raw material price increases will certainly impact cosmetics costs to some extent, such as emulsifiers and oil-based ingredients in creams being affected, it’s important to note that sometimes the formulation costs of cosmetics are even lower than packaging costs, so the impact from raw materials won’t be very large. Marketing and other expenses are the main costs,” the industry expert said.

He believes that for cleaning and washing products like detergents, raw material costs will have a bigger impact. “The surfactants used in these cleaning products are mainly derived from petroleum, and rising oil prices will definitely lead to higher costs.”