Due to the trade tensions with the United States threatening their largest single export market, Chinese manufacturers are scrambling to find buyers both domestically and internationally. Enterprises in Zhejiang, a major export province, are seeking other markets or selling domestically. Since US President Trump announced high tariffs in April, trade data released by China shows that the growth in exports to other markets has to some extent offset the sharp decline in exports to the US. In May, exports to Europe increased by 12% year-on-year, with exports to Germany growing by 22%. Exports to Southeast Asian countries increased by 15%. According to industry news, leading companies in China's organic silicon industry, such as Hesheng, Xin'an, Xingfa, Sibao, and Yuanxiang, are actively promoting their product overseas strategy, with a focus on expanding into markets in South Asia and Southeast Asia. This movement marks a new stage in the globalization process of China's organic silicon industry. The market analysis shows that with the deepening of the "the Belt and Road" initiative, the demand for infrastructure construction in South Asia and Southeast Asia continues to grow, and the rapid development of local electronics manufacturing, new energy, textile printing and dyeing, real estate and other industries has created a huge market space for silicone products. Each enterprise is adjusting its product structure according to regional characteristics and strengthening the construction of localized service capabilities. Industry experts point out that this collective overseas expansion is not only a strategic layout for the international market, but also reflects the overall competitiveness improvement of China's organic silicon industry. In the future, with the release of production capacity and market expansion, the influence of Chinese enterprises in the global silicone market is expected to further strengthen.
On Tuesday, the DMC market in the organic silicon market continued to rise, with Luxi planning to reduce production by 30%. The actual transaction price of mainstream enterprises in Shandong increased by 100 yuan/ton to 10300 yuan/ton. As a result, other individual enterprises' quotations generally increased by 100-200 yuan/ton. With the start of the month end stocking cycle, downstream procurement enthusiasm has significantly increased. Sources revealed that the price of raw rubber fluctuated on Tuesday, with most brands' transaction prices falling to over 11000 yuan. The demand side was instantly activated, and the leading A-class order volume exploded! The daily trading volume of raw rubber enterprises such as Hesheng, Xingfa, Dongyue, Hengxing, Hengyecheng, Xin'an, and Sanyou has significantly increased.
The supply side shows structural adjustment: the actual production of the industry in June slightly exceeded expectations, but the production schedule in July showed differentiation. It is reported that some leading companies are considering production reduction plans, and the overall operating rate of the industry may be lowered. The current strategy for enterprises is to digest inventory, and some manufacturers have initiated pre-sale negotiations.
It is worth noting that in the past three years, the competition in the silicone industry has continued to intensify, and various monomer manufacturers are fighting in this "red ocean". The industry is facing a development trend of "ice and fire": on the one hand, in the blue ocean market with a penetration rate of less than 30% in emerging fields such as photovoltaics, new energy, and electronics, there is vast space for domestic substitution. Top enterprises maintain a gross profit margin of over 50% by researching and developing high-end products (such as electronic grade silicone oil, medical silicone rubber, etc.); On the other hand, in the traditional industrial sector, homogeneous competition has compressed the gross profit margin of DMC products to below 5%, and price wars have become a normalized trend. Market analysis suggests that the industry reshuffle process will accelerate, and companies with the dual advantages of "technology+cost" are expected to win in the competition. In the next six months, the organic silicon industry chain may present a differentiated development pattern of "premium for high-end products and low profit for basic products".
Overall, Mr. Wu believes that a new round of stable growth policies is expected to be introduced in China before the end of June, injecting more momentum into the market. However, as we enter July, the market focus will shift towards two key events: on the one hand, listed companies in the silicone industry will gradually disclose their interim performance, which may trigger product price fluctuations in terms of profitability; On the other hand, the important time point of July 9th is approaching, and the temporary suspension of tariffs imposed by major economies on the United States may expire, which may once again reshape the international trade pattern and bring new variables to the macroeconomic environment. The combined effect of these two factors may make July an important turning point for the silicone market.