Silicone product prices hit a two-year high

The price of silicone DMC (an important silicone monomer, dimethylcyclosiloxane) has climbed from RMB 15,500/ton at the end of July to RMB 23,000/ton yesterday, an increase of 48.4%, a two-year high. At present, most domestic organic silicon monomer plants, including related A-share listed companies, are producing at full capacity, and corporate inventories are at a low level, and orders are scheduled from late November to end of November.

September to November is the peak season for silicone sales. This year, under the expectation of the cold winter, the demand for fabrics in autumn and winter has increased, coupled with the transfer of overseas textile and clothing orders and other factors, driving the demand for organic silicon textile auxiliaries to improve; The demand has increased substantially. According to data from the General Administration of Customs, the export volume of organic silicon products in my country in September this year increased by 22.4% year-on-year, which drove the rapid increase in domestic product prices.

On the supply side, my country's organic silicon DMC production capacity will be about 1.49 million tons per year in 2019, accounting for about 58.3% of the global total. Since the beginning of this year, my country's organic silicon production capacity increase has mainly come from Xingfa Group and Xin'an. Among them, the organic silicon monomer production capacity of Xingfa Group increased from 200,000 tons/year to 340,000 tons/year; after the 150,000 tons/year organic silicon monomer project in Zhenjiang Jiangnan, a wholly-owned subsidiary of Xin'an Co., Ltd. reached production, the monomer production capacity increased to 500,000 tons/year.

On the demand side, the downstream of organic silicon covers the fields of construction, electronic appliances, electric power, new energy, medical treatment and personal care. The continued promotion of the “old reform” in the construction industry, the accelerated development of semiconductors and 5G in the electronic and electrical industry, and the development of photovoltaics and new energy vehicles. The rising temperature has brought positive benefits to the demand for silicones.

The Essence Securities Research Report believes that the current industry capacity increase has been digested and the downstream demand is still not satisfied, the industrial chain inventory is at a low level, and the overseas resumption of production is not clear. The current round of silicone price increases are expected to exceed expectations.

Among A-share listed companies, listed companies such as Xin'an Co., Ltd., Dongyue Silicon Materials, Xingfa Group, Hesheng Silicon Industry, Sanyou Chemical, Luxi Chemical and other listed companies have the production capacity of organic silicon products. The production capacity of organic silicon monomers is respectively: Xinan shares 500,000 tons/year , Dongyue Silicon Materials 300,000 tons/year, Xingfa Group 320,000 tons/year, Hesheng Silicon Industry 530,000 tons/year, Sanyou Chemical 200,000 tons/year, Luxi Chemical 80,000 tons/year.

Currently, related listed companies are mostly in a state of full production and sales. According to the monitoring of Zhuochuang Information yesterday, Xin'an's total production capacity of 500,000 tons is currently running smoothly, and the silicone DMC price is 23,000 CNY/ton. Dongyue has an annual production capacity of 250,000 tons of organic silicon monomers and currently two sets are in operation. The annual production capacity of the organic silicon monomer enterprise of Sanyou Silicon Industry under Sanyou Chemical is 200,000 tons. Currently, two sets are in operation. The second phase is scheduled to be overhauled on the 11th. The silicone DMC is temporarily closed and will not be reported. The manufacturer mainly provides core customers with orders. compact. Luxi Chemical's 80,000 tons of organic silicon monomer equipment is currently operating smoothly, and the external quotation of organic silicon DMC has been raised to 24,100 CNY/ton.

The sharp rebound in organic silicon prices has increased the performance of related companies since the third quarter. The third quarter report of Hesheng Silicon Industry showed that the company's gross profit margin in the third quarter was 30.94%, an increase of 7.1 percentage points from the previous quarter. The net profit of Xin'an shares attributable to its parent in the third quarter was 102 million yuan, an increase of 142.74% from the previous quarter. In the third quarter, Xingfa Group achieved revenue of 5.88 billion yuan, a year-on-year increase of 19%, and a month-on-month increase of 8.2%; net profit attributable to the parent company was 220 million yuan, a year-on-year increase of 26.5% and a month-on-month increase of 95%.