Moebe Vision | Siloxane Market, End the War


Since 2014, the domestic organosilicon market has changed from net import to net export. In 2015, domestic net exports of about 10,000 tons of siloxane (391,000,000 data under customs code translated into siloxane) meant that domestic demand was about 76,000 tons, an increase of about 3% over the previous year. From 2011 to 2013, the growth rate remained above 10%. Domestic demand growth has slowed down.


After Xin'an acquired HTC in 2013 and Hesheng acquired Silicon Peak in 2015, there are currently 14 domestic siloxane manufacturers, two of which are currently out of production. Apart from the original Silicon Peak plant acquired by Hesheng, which will be put into production in September 2016 (upgrading of the original Silicon Peak 100,000 tons plant) and the expected production of 200,000 tons of new equipment in 2017, the remaining 13 companies have no plans to expand production. Hesheng will become the largest monomer plant in China (315,000 tons of monomer capacity by 2016, and 515,000 tons of monomer capacity by 2017).


3. Fourteen domestic suppliers are caught up in price war and are beginning to find a way out.


The data show that the average domestic DMC price shows a downward trend from 2014 to 2016. At present, the mainstream domestic average price is hovering at 13,000 yuan per ton. As the largest cost of DMC production, the average price fluctuation of metal silicon is consistent with the overall trend of DMC.


At present, the domestic DMC market is in a serious price war, and the profit per ton is between 200 and 300 yuan. The upstream homogeneity is serious, and DMC is dangerous goods. There is a certain threshold for export. In the short term, the situation of serious domestic oversupply cannot be effectively improved.


According to the analysis, among the cash cost of DMC production (including labor cost, excluding depreciation and amortization), metal silicon cost accounts for about 50%, methanol nearly 20%, electricity and steam costs account for 10-15%. Therefore, among the domestic DMC producers, the price pressures faced by the manufacturers with the above resource advantages are relatively small, such as Xin'an, Blue Star and Hesheng with metal silicon production lines, Xin'an, Xingfa and Luxi with methanol resources, Sanyou, Luxi and Hengye with geographical advantages in their own power plants or electricity prices. Wait for the company. However, high cost pressures such as Hongbo and Sanjia have been discontinued. Some less competitive suppliers may withdraw from the market or be acquired and merged.


At present, there is a consensus among 14 domestic suppliers to stop price war and stop blindly pursuing high start-up rate and low inventory. Some manufacturers have started the flexible exchange mode (SWAP). For example, the freight charges from East China factories to South China customers are higher. Instead, another supplier located in South China delivers goods close to each other, while their own East China factories deliver goods of the same value to the other's customers in East China, in order to reduce freight charges and increase profits. At the same time, some suppliers have formulated new strategies, the goal is to develop downstream, use downstream production to consume DMC, reduce DMC export, and create profitable space.


Developing deeper downstream, creating closed-loop and avoiding homogeneous competition are the martyrs that every practitioner realized in this war. I wonder if there will be another new battlefield in the downstream market after the end of the DMC war.


From Wechat Public Number