The "race track" of the silicone industry in 2025 has quietly begun, and the choice of track is crucial for the future development of enterprises. High quality tracks often mean higher profit margins. Recently, an internal letter from an organic silicon company revealed that its general manager predicted that due to cost control and intensified product homogenization, competition in the industry will become even more intense. The "race track" may erupt comprehensively from early 2025, and the next two to three years will become a new round of elimination in the organic silicon industry. In the face of this challenge, enterprises will remain steadfast in their growth confidence and actively adapt to changes in the track.
For the supply and demand pattern in 2025, the general manager of the company analyzed that after experiencing the weak supply and demand situation in 2024, the overall organic silicon industry will still be in a state of oversupply in 2025, but there are also opportunities for structural supply-demand mismatch. It is expected that the demand growth in 2024 and 2025 will remain within the range of 3% to 5%. However, the supply side has further increased large-scale production capacity on the basis of already significant overcapacity, which will put greater profit pressure on the organic silicon industry chain in 2025. Nevertheless, top companies with larger market share and ample cash flow are expected to demonstrate stronger resilience.
Market monitoring data shows that since the beginning of the new year, the prices of several niche products have shown an upward trend, especially on January 6th, the price of vinyl double head has once again risen. The main reason for the price increase of niche products in this round is the shortage of supply, especially the supply of vinyl double head series is even more tight. As of January 7th, prices of various silicone products have increased, such as Luxi hydrolysate, DMC spot, raw rubber, 107 rubber, domestic silicone oil, and imported silicone oil.
Although the overall inventory of organic silicon monomer enterprises remained at a relatively low level of 63600 tons at the end of December, it is understood that there is no long-term maintenance plan for domestic monomer factories in January 2025, and only a few enterprises plan to carry out short-term maintenance. It is expected that the monthly production will increase. Meanwhile, the pre-sale orders of major corporations are nearing completion, and the pressure on the supply side may increase in the short term. Before the Spring Festival, individual factories may adopt a strategy of bidding for shipments in order to accept orders and reduce inventory, which may lead to a risk of DMC prices falling.
In addition, the US Department of Defense recently updated the list of "Chinese military enterprises" in the Federal Register, adding five new companies including Tencent and CATL. The complete list now includes 134 Chinese enterprises. According to relevant US laws, listed companies will face multiple restrictions, including restrictions on signing, renewing, or extending contracts for goods, services, and technology with the US Department of Defense. This sanction measure will undoubtedly have a certain impact on the international business of the listed companies.
In summary, the organic silicon industry will face many challenges and opportunities in 2025. Enterprises need to closely monitor market trends and flexibly adjust their strategies to cope with industry changes.