Silicone industry: The market is turbulent and the industry continues to grow

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Silicone industry: The market is turbulent and the industry continues to grow.: China Silicone Network | date: 2007-10-11 In recent years, my country's silicone industry has developed rapidly. According to statistics, from 2000 to 2006, the apparent consumption of my country's silicone market grew at an average annual rate of more than 30%, making it the fastest growing silicone market in the world. In the first half of 2007, the silicone market was also turbulent.: On May 21, the silicone device of Zhejiang Hesheng Chemical Co., Ltd. exploded during trial production due to the use of immature technology and design. The explosion fully demonstrated the high barriers to entry in the silicone industry. On June 11, news came from Shandong Dongyue Group that the first phase of the group's organic silicon project - a 60,000 tons/year organic silicon project will be put into production in October this year. On the one hand, the market is growing rapidly and new projects are increasing. On the other hand, the barriers to entry are high. It can be seen that risks and opportunities coexist in the silicone industry. What will be the trend of the domestic silicone industry in the second half of the year? An interview with Mei Shengfang, Secretary General of the China Fluorosilicone Organic Materials Industry Association. Market demand is rising and construction projects are increasing. At present, the main domestic silicone manufacturers are domestic companies such as Blue Star Chemical New Materials Co., Ltd., Xin'an Chemical Group Co., Ltd., Jilin Chemical Group Co., Ltd., Jiangsu Meilan Chemical Group Co., Ltd., and multinational companies such as Dow Corning Company of the United States, Moment Advanced Materials Group of the United States, Wacker Chemical Company of Germany, and Shin-Etsu Chemical Co., Ltd. of Japan. According to Mei Shengfang, the overall performance of the domestic silicone market in the first half of the year was good. Xin'an Chemical Group Co., Ltd.'s recently announced interim report shows that the company achieved main business income of 1.616 billion yuan in the first half of 2007, a year-on-year increase of 10.65%. ； Achieved net profit of 191 million yuan, a year-on-year increase of 52.38%. Mei Shengfang predicts that with the growth of demand, the silicone industry is expected to continue its current good trend in the second half of the year. The high prosperity of the silicone industry in the first half of the year was mainly due to the high price of the organic silicon intermediate DMC, which remained at a high level of 26,000 yuan to 30,000 yuan/ton. At the same time, the prices of the main raw materials of organic silicon did not rise simultaneously, and the prices of methanol and hydrochloric acid also fell. The prosperity of the market has increased the confidence of enterprises to enter the industry. On July 31, Xin'an Chemical Group Co., Ltd. and Momentive Advanced Materials Group of the United States jointly announced that the silicone monomer project with an investment of US$100 million from both parties was officially approved. It is reported that the newly established joint venture will build a 100,000 tons/year organic silicon monomer project. The Zhangjiagang joint venture of the world's silicone giants Dow Corning and Wacker is also expected to reach 400,000 tons/year of silicone production capacity by 2010. The company will build an integrated silicone product chain from primary raw materials, intermediates to the development, production and sales of downstream products. In addition, the 200,000 tons/year organic silicon monomer project built by Blue Star Group after acquiring the organic silicone division of French Rhodia Company, as well as the 200,000 tons/year organic silicon project of Shandong Dongyue Group and the 100,000 tons/year organic silicon project of Shandong Jinling Group are also under planning and construction respectively. According to the current construction speed, domestic silicone production will reach a scale of 1.5 million to 1.7 million tons by 2010. There is broad room for growth with simultaneous innovation and absorption. According to Mei Shengfang, the gap between the technical level of the domestic silicone industry and international giants is slowly narrowing, but the pace of technological innovation needs to be accelerated. There are nearly 10,000 kinds of downstream silicone products in the world, but only a few hundred kinds can be produced domestically. In addition, the global average sales price of silicone monomers per ton is about 40,000 yuan, while the sales price of silicone monomers per ton in my country is only about 13,000 yuan, which fully shows that the technical gap between Chinese and foreign silicone products is still very large. With the acceleration of domestic technological innovation, especially after Blue Star acquires Rhodia, it can make full use of Rhodia's technical advantages. Xin'an Chemical will also introduce its advanced monomer production technology through cooperation with Momentive, and this gap will gradually narrow. The application penetration rate of my country's silicone products in the country is still low. In 2006, the global per capita consumption of organic silicon products was US$1.5/year, the per capita consumption of organic silicon products in the Americas was US$4.5/year, the per capita consumption of organic silicon products in Europe was US$4.3/year, and the current per capita consumption of organic silicon in China is only US$0.75/year. China's per capita consumption of silicone products is 1/2 of the global average. * * 1/6. At the same time, the global silicone market has exceeded US$10 billion. It is expected that in the next few years, organic silicon, which plays an important role in various fields of the national economy, will have broad room for growth. Accelerate downstream development and pay attention to investment risks. Although the organic silicon revenue of Blue Star Chemical and Xin'an Chemical has doubled in three years, with the increase in organic silicon production capacity, the organic silicon industry will face a new competitive landscape in the second half of the year. Further development of the downstream market is the way to sustainable development of the industry. If there is a lack of development of high-tech products downstream, silicone will face the risk of falling prices and declining profits. In addition, the added value of domestic enterprises' silicone products is generally low, product quality needs to be improved, and uses need to be further promoted. The better domestic silicone downstream companies mainly import silicone monomers, with gross profit margins around 15%. Due to the backward level of monomer production, the gross profit margin level of downstream products produced by domestic silicone monomer companies is lower than that of downstream companies producing imported monomers. At present, Xin'an Co., Ltd. has developed polyether-modified silicone oil products, and Chuanhua Co., Ltd. and Demei Chemical also have unique advantages in the development of silicone textile auxiliaries. In terms of deep processing of silicone rubber, prefabricated and cold-shrinkable cable accessories based on silicone rubber not only have outstanding advantages in high-voltage products, but also have obvious safety performance, and will gradually replace the market of traditional heat-shrinkable power cable accessories. The exploration of Shenzhen Changyuan New Materials Co., Ltd. and the newly listed Shenzhen Wall Nuclear Materials Co., Ltd. in this field is worth looking forward to. Mei Shengfang finally emphasized the investment risks in the silicone industry. He said that the silicone industry must prevent blind construction from causing overcapacity and affecting the market. In addition, the silicone industry has high entry barriers and is a technology-intensive industry, so companies must enter carefully.