China's silicone production capacity is rapidly growing and transitioning to high value-added

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China's silicone production capacity is growing rapidly, and the industry is planning to transform into high value-added products. In recent years, China's silicone industry has developed rapidly. A large amount of money has been invested in the silicone industry, attracted by high rates of return. It is expected that domestic production and sales of silicone monomers will reach a balance around 2010. Taking into account domestic technological progress, domestic dependence on imported siloxane will * * By then, the industry will seek to develop into high value-added products. Companies that currently have the production capacity of silicone monomers and products will have certain advantages in terms of time and experience. Sales network and technical services are the advantages of Hongda New Materials. Since silicone rubber customers are relatively scattered and different customers have different product requirements, this requires companies to respond quickly to customer needs, develop corresponding products, and provide corresponding technical services according to customer needs. The service characteristics of market segments determine that capital is not the only factor of competitiveness. Hongda New Materials has been engaged in the high silicone rubber business for many years and has certain advantages in sales network and technical service capabilities. The start-up status of silicone monomers has little impact on the company's performance. Based on our judgment that the gross profit of silicone monomers will be compressed and the current low market price of DMC, we believe that the market does not need to worry too much about the start-up status of the company's silicone monomers. There is great pressure to release high-silicone rubber's short-term production capacity, but this is conducive to industry consolidation. According to incomplete statistics, high silicone rubber production capacity will reach 177,000 tons and 220,000 tons respectively in 2008 and 2009. On the demand side, due to the deterioration of the international economic environment, its growth rate will slow down. It is estimated that the national demand for high silicone rubber in 2009 will be around 190,000 tons. In the short term, demand will face certain pressure. However, in view of the main downward trend of high silicone rubber: The demand for buttons may rebound with retaliation after the economy recovers. We are still optimistic about the development prospects of the industry. All projects under construction will be completed by mid-2009, and the expansion of production capacity will bring about growth in performance. In early 2009, Hongda New Material's 30,000 tons/year rubber compounding project will be completed. ； In mid-2009, its 45,000 tons/year silicone monomer project will reach production capacity. By then, the company will have an annual production capacity of 75,000 tons of silicone monomer and 50,000 tons of high-silicone rubber. The expansion of production capacity is expected to drive the company's performance growth.