Analysis and Prospect of Silicone Market in China in the First Half of 2019


In the first half of 2019, China's silicone monomer enterprises started construction at a high level as a whole, with sufficient market supply and a certain stock accumulation. Compared with the sharp rise and fall of prices in 2018, the price fluctuation of silicone in China in 2019 was narrow and contracted, which tended to be relatively rational. However, under the influence of shrinking export volume and off-season demand, the price of silicone has been hovering at a low level. In the first half of the year, China's macro-economic development has shown a steady and progressive trend, and the downstream consumption areas have their own characteristics. The overall macro-environment in the second half of the year is expected to remain optimistic. The downstream market demand for organosilicon will be increased, and the price of organosilicon is expected to fluctuate steadily and slightly.


High-level supply capacity of individual enterprises in start-up


In the first half of 2019, the output of organosilicon monomer in China was about 1.184 million tons, with an average start-up rate of 86%. Except for the long-term parking and overhaul of Jinling and Zhongtian devices in Shandong Province in May and June, the other monomer enterprises started construction at more than 80% level, and the market supply capacity became stronger. In the second half of the year, Hesheng's 200,000 tons silicone monomer project is expected to be completed and put into operation, and the domestic market supply will be further enhanced.


Price volatility narrows and hovers low


Compared with the sharp price fluctuations in 2018, in the first half of 2019, the price of organosilicon in China tended to be rational, the increase rate narrowed, and it has been hovering at a low level. Since November 2018, the price of organosilicon products has been in a downturn. Although the price of organosilicon products has risen sharply from 1820 yuan/ton in mid-February to 21400 yuan/ton in February 2019, driven by the traditional small peak season, the price of organosilicon products has declined sharply compared with the same period last year. In the first half of 2019, D4 and DMC decreased by 37% and 39%, raw rubber and 107 rubber by 37% and 38%, and mixed rubber and dimethyl silicone oil by 21% and 37% respectively.


Export Reduction Affected by Tariff Imposition


In August 2018, the US tariff on Chinese primary shape polysiloxane (3910) increased to 25%. From the customs export data, it can be found that the domestic primary shape of polysiloxane export volume has decreased since August 2018. From January to May 2019, the export volume of primary shape polysiloxane (physical quantity) in China was 99,000 tons, down 10.8% from the same period last year; from January to May 2019, the import volume of primary shape polysiloxane (physical quantity) in China was 57,000 tons, which was basically the same as the same period last year.


Overall stable macro-environment downstream development has increased or decreased


In the first half of 2019, China's GDP grew by 6.3% year-on-year. The economic operation will continue to be within a reasonable range, with overall stability and steady progress. Silicone is mainly used in construction, textiles, automobiles and so on. In the first half of 2019, the growth rate of various consumption areas increased or decreased. The real estate market as a whole showed a warming trend, with new housing construction area of 797.84 million square meters in January-May, an increase of 10.5%; textile exports showed a slight decline trend, with the cumulative export volume of textile and apparel in China falling by 2.88% in January-May, to 99.589 billion US dollars, compared with the same period last year; and the automobile industry remained depressed, with China's automobile production and sales in January-May 2019 reaching 1023.70%. Ten thousand and 10.2659 million vehicles, down 13.01% and 12.95% year on year. China's production and sales of new energy vehicles totaled 479,800 and 464,500, up 46% and 41.51% over the same period last year.


Market Forecast for the Second Half of the Year


Looking forward to the second half of 2019, the global economic environment is more complex and changeable due to the unoptimistic Sino-US trade relations and the overlapping expectations of the Fed's interest rate reduction. China's consumption policy has vigorously boosted downstream demand. Macro-economic policies and market expectations are better than last year, and market confidence has increased. In the second half of the year, the influence of the tariff levy on organosilicon in China still exists, and the growth space of foreign market is limited. With the introduction of Hesheng monomer production capacity, the supply of domestic organosilicon market remains at a high level. Under the pressure of low product price and high cost, the single enterprise may reduce production appropriately, but with the coming of the peak consumption season, the market demand environment will be improved, the contradiction between supply and demand of silicone will be eased to a certain extent. It is expected that under the influence of both positive and negative factors, the Chinese silicone market will show stable, small and medium fluctuations. Potential.