This year's silicone prices are like a roller coaster, touching the hearts of every 'downstream person'. Although the entire silicone market has entered a cooling off period for restocking, it does not mean that "downstream people" no longer love restocking. The suppressed demand for restocking from "downstream people" is still strong. The most obvious thing is that after each wave of price adjustments by leading manufacturers, both small and large manufacturers on the demand side will follow suit and replenish their inventory. This week, Luxi will mainly ship linear and D4 products, and DMC inventory will continue to be cleared without any offers. The overall price of organic silicon remains stable, and some manufacturers are expected to see a slight increase; The downward trend in spot transaction prices is expected to continue to converge, and downstream prices of silicone rubber and rubber compound may show a flat trend ahead of schedule. Currently, the silicone industry is in a 'cold winter', with more than half of the upstream and downstream enterprises in the industry chain continuing to suffer losses. It is expected that most raw material prices will remain at their current relatively low levels next year. Among them, products with deeper losses since 2024, faster clearance of outdated production capacity, and stronger discourse power of top enterprises may have some room for price rebound next year. Industry experts believe that with the continuous increase in downstream penetration rate of major enterprises and the expansion of production capacity by downstream giants, the competition in the industry will shift towards mid to downstream products from 2025 to 2027.
Whether it is the supply side or the demand side, there will always be a "ceiling" for industrial growth. The industry must be proactive and use synthetic chemistry technology to open up new tracks in the field of organic silicon applications. As of December 10th, the mainstream spot prices for DMC in China are 12600-13700 yuan/ton, for raw rubber they are 14000-14500 yuan/ton, for 107 rubber they are 13500-14000 yuan/ton, and for silicone oil they are 14800-16500 yuan/ton. 421 # metal silicon is reported at 12500-13100 yuan/ton, chloromethane is reported at 2650-2750 yuan/ton, and high hydrogen silicone oil mainstream is reported at 7500-7800 yuan/ton. This year, price inversion and high inventory have led to another deep adjustment in the silicone industry since its sharp rise in 2021. After years of rapid growth, the silicone price foam in 2024 was punctured by reality. In this context, the industry is expected to shrink or become the main trend from 2024 to 2025, and the slowdown trend in the third quarter reports of major organic silicon listed companies may continue; The relationship between upstream strong and downstream weak manufacturers may face a change. The latest cross-border e-commerce data in Shenzhen shows that China's cross-border e-commerce of silicon products has developed rapidly in the past two years with the rapid expansion of platforms and scale, and the proportion of foreign trade exports has increased. This is of great significance for coordinating and optimizing domestic silicone production capacity and discovering global demand, and is expected to continue to benefit from policies; Under the changing global trade pattern, the matching of supply and demand for high-quality silicon products is the core, and the core competitiveness of silicon product manufacturers should focus on brand+operation+differentiation attributes.
A silicone company in Zhejiang failed to go public! On December 8th, Zhejiang Kefeng Organic Silicon Co., Ltd. (referred to as Kefeng Co., Ltd.) terminated its IPO on the ChiNext board of the Shenzhen Stock Exchange. Due to the withdrawal of the issuance and listing application by Kefeng Corporation and its sponsor, in accordance with Article 62 of the Shenzhen Stock Exchange's Stock Issuance and Listing Review Rules (Revised in 2024), the Shenzhen Stock Exchange has decided to terminate its issuance and listing review.
According to the prospectus, Kefeng Co., Ltd. is a high-tech enterprise specializing in the research and development, production, and sales of textile printing and dyeing auxiliaries, nano liquid dispersed dyes, and other organic silicon products, with organic silicon application materials as its main business. It is also a national level specialized and new "little giant" enterprise. Its main products include post-treatment auxiliaries such as block silicone oil and amino silicone oil, pre-treatment auxiliaries, dyeing and printing auxiliaries, nano liquid dispersed dyes, and hexamethyldisiloxane. The company has a complete range of product categories and a complete business chain, and has become one of the leading block silicone oil enterprises in China.
The four products developed by Kefeng Co., Ltd., including "versatile hydrophilic amino silicone oil", "block polyether hydrophilic amino silicone oil for cotton", "dye bath moisture wicking agent KF-1474", and "cotton special hydrophilic block silicone oil SSK-90", have been identified by the Zhejiang Provincial Department of Economy and Information Technology (Zhejiang Provincial Commission of Economy and Information Technology) as leading industrial new products (new technologies) at the provincial level. The company has established good business cooperation with downstream professional large and medium-sized chemical enterprises such as Rudolf Chemical, Huntsman Textile, Demawak, etc., and its products and technologies have been recognized by customers, accumulating many high-quality customer resources.
During the reporting period, the raw materials purchased by Kefeng Corporation mainly included chemical materials such as DMC and isopropanol. During the reporting period, the main suppliers of the company included Zhejiang Zhongtian Dongfang Fluorosilicon Materials Co., Ltd., Luxi Chemical Group Co., Ltd. Silicon Chemical Branch, Hesheng Silicon Industry Co., Ltd., Shandong Jinling Chemical Co., Ltd., etc.
With the development of technology and the transformation and upgrading of economic structure, the application field of deep processing of organic silicon, especially the application field of high-tech products, continues to expand. Emerging industries such as 5G communication, new energy, and consumer electronics are showing a vigorous development trend. The rapid popularization and upgrading of end-user products and supporting infrastructure in these industries have greatly driven the growth of demand for organic silicon products in the upstream of the industrial chain. The company also seized the opportunity and continuously expanded horizontally and vertically in the textile printing and dyeing auxiliaries and organic silicon industry chain, actively cultivating new profit growth points. Its subsidiary Quzhou Kefeng's products can be widely used in electronic and electrical, medical, new energy and other fields, which is a key development direction for strategic emerging industries. In 2022, Quzhou Kefeng's new products achieved a revenue of 26.1584 million yuan. At the same time, the company is researching the technology of lithium battery additives boronic ester (TMSB) and phosphate ester (TMSPA). Once the technology matures and enters the market, it can effectively expand the company's profit growth space. In terms of finance, in 2020, 2021, and 2022, Kefeng Corporation's operating revenue was 314 million yuan, 519 million yuan, and 440 million yuan, respectively. During the same period, the company's net profit was approximately 37.22 million yuan, 73.0955 million yuan, and 64.518 million yuan, respectively.
According to the prospectus of Kefeng Corporation, the company's main raw materials are DMC, isopropanol, and hydrogen containing double heads. During the reporting period, the proportion of direct material costs in the company's main business costs was 91.77%, 94.40%, and 92.42% (excluding shipping costs), respectively, which accounted for a relatively high proportion of the main business costs. The change in raw material procurement prices is an important factor affecting the gross profit margin of the company's products. In recent years, the unit price of some raw materials purchased by the company has fluctuated significantly. If the prices of raw materials continue to rise rapidly or fluctuate frequently in the short term in the future, and the company cannot take effective measures in a timely manner, it may affect the market competitiveness of the company's products and have a negative impact on the company's revenue growth and profit improvement.