(Jiangxi New Materials Co., Ltd.)

Business Club: Analysis of Domestic Silicone DMC Market in 2015 (Jiangxi New Materials Co., Ltd.)

Business Club News on December 31

(Jiangxi New Materials Co., Ltd.)

1. Price trend

According to the monitoring data of SunSirs, the domestic silicone DMC market generally showed a downward trend in 2015. The average domestic ex-factory price at the beginning of the year was 17,060 yuan/ton, and the average price of silicone DMC at the end of the year was 14,328 yuan/ton, with the price falling by 15.69%.

2. Market Analysis

Product: In 2015, the domestic silicone DMC market was also in a state of overcapacity. In 2015, the global annual silicone production capacity was 3.98 million tons, and the annual output was about 2.38 million tons, while the domestic demand was about 1.618 million tons, and the export volume from January to October Reaching about 110,000 tons, the organic silicon market has serious overcapacity and the market lacks upward momentum.

Analyzed by product output in the first half of the year, domestic silicone DMC production increased slightly in the second quarter. The total domestic silicone DMC production in the second quarter was about 198,000 tons, an increase of about 18,000 tons compared with the first quarter. On the one hand, the operation of most single units is relatively stable, and there are few single units that have been shut down for a long time during the quarter; on the other hand, there is the release of new production capacity such as Xinghuo, Sanyou, and Dongyue. In terms of operating rate, as of the end of June, Jiangxi Xinghuo maintained a monomer production capacity of 240,000-300,000 tons, Shandong Dongyue’s two monomer units totaling 250,000 tons, and Tangshan Sanyou’s two monomer units of 200,000 tons were all operating normally.

In the second half of the year, the silicone market will become increasingly flat, and domestic manufacturers have a strong awareness of price stabilization. In November, the market price of organic silicone DMC showed an overall trend of stopping rising and stabilizing. The manufacturer’s price was stable at around 15,000 yuan/ton. Shandong Jinling Group Co., Ltd.’s organic silicone DMC price increased to 15,000 yuan/ton. The overall operating rate of manufacturers was relatively high, and goods were sold. Smooth. The current operating rate of manufacturers is between 70% and 80%, and the inventory is reasonable. Near the end of the year, the market price of silicone DMC has shown an overall downward trend. The current market price of silicone DMC from manufacturers is 14,600 yuan/ton, and the transaction price is around 14,300 yuan/ton. In terms of equipment, the average start-up of domestic companies has increased compared with before. As a result, corporate inventories have gradually increased, and the downstream market has been sluggish.    

Industrial chain: At present, the upstream metal silicon market of organic silicon DMC is generally stable. With the reduction of spot resources in the main production areas in southwest China, silicon factories are more reluctant to sell, and the quotations tend to be stable, but the actual transactions are not ideal. Downstream demand has decreased, and organic silicone manufacturers are trying to collect payment before the holidays, resulting in a slight price reduction in the organic silicon market.

Industry: In 2015, the operating rate of the silicone monomer industry was basically maintained at full capacity. However, the monomer production capacity base increased in 2015. From this perspective, the operating rate of the monomer industry in 2015 is still mainly on a downward trend. In the past two years, the operating rate of the domestic silicone monomer industry has remained around the mid-range, and the phenomenon of insufficient operating load has become prominent. On the one hand, there has been a lot of new production capacity. In 2014, the new production capacity was about 320,000 tons. In 2015, the new production capacity was 250,000 tons, the production capacity base has increased, but the pace of production growth has been slow and the production capacity utilization rate is low; on the other hand, the tight supply of raw material silicon blocks in 2014 has eased in 2015, but the weak downstream demand has made it even more Obviously, the silicone market in 2015 was “slow in the peak season and even weaker in the off-season.” Market prices frequently hit bottom, and the mentality of individual companies to limit production and protect prices increased significantly during the year. ​

3. Market Outlook

Analysts from Business Society Organic Silicone DMC believe that as the end of the year is approaching, the upstream raw material market has basically remained stable, and the pace of payment collection by organic silicone companies in production has accelerated before the year. However, the current downstream market is sluggish, and the demand for silicone is gradually decreasing. Manufacturers mostly rely on orders. Purchasing is the main focus. Under the influence of severe overcapacity and the peak season of the organic silicon market, it is expected that the organic silicon market will stop falling and stabilize in January 2016. The overall organic silicon market will show a mountain-shaped trend throughout 2016.

Relevant listed companies: Dongyue Group (00189.HK), Xin’an Co., Ltd. (600596.SH), Hongda New Materials (002211.SZ).

Contact information of Silicones DMC analyst of Business Society, Tel: 025-83337944, QQ: 347618859.

(Article source: Business Society)

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