Topco Technologies expects silicone prices to continue rising as the supply of such material remains limited.
Topco distributes silicone materials manufactured by Japan's Shin-Etsu. Suppliers of silicone materials remain cautious about expanding their production capacities, while demand expands gradually thanks to more end products that use such material, according to Topco chairman Pan Chen-cheng.
Major silicone suppliers include Dowsil (formerly Dow Corning), MPM, Wacker and Shin-Etsu.
Limited growth on the supply side coupled with growing demand for a broader range of applications will continue to drive up silicone prices but at a slower pace for the rest of 2018, Pan believes. Prices for the silicone materials distributed by Topco have risen by as much as over 200% compared to a year earlier.
Pan expects Topco's shipments for the first half of 2019 to outpace the levels a year ago thanks to new product roll-outs. The company also remains cautiously optimistic about its performance in the second half of 2018, Pan continued.
Pan disclosed Topco's revenues and profits increased 18% and 55%, respectively, on year in the first half of 2018. Despite an about 10% shipment decrease compared to a year earlier, Topco's EPS for the six-month period came to NT$3.76.
China has been Topco's largest market, said Pan, adding that the US-China trade war has created uncertainty discouraging several of its clients from ramping up orders over the last two weeks.
Pan also forecast that the global silicone market will grow at a CAGR of 6% through 2020 when revenues will reach US$20.3 billion. Sales of Shin-Etsu's silicone materials account for more than 70% of Topco's total revenues.
Topco chairman Pan Chen-cheng
Photo: Julian Ho, Digitimes, August 2018
Article translated by Jessie Shen
