(Jiangxi New Materials Co., Ltd.)

According to Baichuan Information, in the second half of 2016, the price of organic silicon intermediate DMC stopped falling and rebounded, rising from 12,500 yuan/ton in early July to the current 15,700 yuan/ton, an increase of 3,200 yuan/ton, an increase of 20 %. The entire industrial chain of organic silicon has experienced varying degrees of increase. Raw rubber has increased by 2,600 yuan/ton (+18%), reaching 16,700 yuan/ton; 107 rubber has increased by 2,100 yuan/ton (+15%), reaching 16,100 yuan/ton. tons; silicone oil rose by 1,500 yuan/ton (+10%) to 17,000 yuan/ton.
Brief review
Environmental protection factors are the main factor in price increases
The price of organic silicone intermediate DMC gradually dropped from 23,000 yuan/ton in 2010 to 12,500 yuan/ton in June 2016, and then stabilized and rebounded, mainly due to production capacity contraction caused by environmental protection and losses. Affected by the G20 Summit in late August, Hesheng Chemical, Zhejiang Xin’an, and Zhejiang Zhongtian shut down their devices with a total production capacity of about 500,000 tons. Hengyecheng, Dongyue, Jinling and other devices successively experienced unstable operation. DMC and downstream raw rubber, The price of 107 glue has risen sharply. The current national total production capacity of silicone monomers is about 2.8 million tons/year, and the operating capacity is 2.5 million tons/year. Recently, environmental protection has become stricter in Shandong and Hubei, and the affected production capacity is about 580,000 tons/year. The current The annual output level is 1.8 million tons, the operating rate of operating devices is expected to rise to more than 80%, and prices are still expected to continue to rise.
With low inventory levels, demand recovery has also driven up prices
The downstream of silicone mainly includes silicone rubber, silicone oil, silicone resin, silicone coupling agent, etc., and the terminal consumption areas are real estate, infrastructure, automobiles, electronics, daily chemicals and other consumer fields. With the slowdown of economic growth, the demand of the organic silicon industry The growth rate has gradually declined, but still maintains a level of 7%-8%. Since the second half of 2016, the recovery of the real estate, infrastructure, and automobile industries has gradually been transmitted to the silicone industry, and industry demand has shown a weak recovery. At present, inventories in the silicone industry remain low, and the weak recovery of the industry also has a boosting effect on prices. In the long term, my country’s per capita consumption of organic silicon is only 0.5 kilograms, while in developed countries abroad it is around 2 kilograms. There is still room for growth in demand for organic silicon.
Slightly increased costs
The main organic silicon raw materials are methanol (consumption per ton of DMC is 1.2 tons) and metallic silicon (0.5 tons). In the second half of the year, driven by coal as raw material, the price of methanol has increased by 600 yuan/ton, and the price of metallic silicon has increased by 500 yuan/ton. This drove up the cost by 970 yuan/ton, supporting the rise in organic silicon prices.
Focus on Xin’an Shares
Listed companies related to organic silicon are mainly Xin’an Co., Ltd. (organic silicone monomer production capacity is 280,000 tons/year, and DMC production capacity is about 0.5 times that of monomer), Xingfa Group (180,000 tons/year), and Sanyou Chemical (200,000 tons /year); every 1,000 yuan/ton increase in DMC price will increase the EPS of Xin’an Shares by 0.13 yuan, Xingfa Group by 0.11 yuan, and Sanyou Chemical by 0.03 yuan.