The horn of 2025 has been sounded, and the "race track competition" in the silicone industry has officially begun. Choosing the right track has become the key to determining the fate of enterprises, indicating that a good track is equivalent to considerable profit returns. Recently, an internal communication from a leading company in the field of organic silicon revealed the forward-looking perspective of its senior management: the general manager warned that the extreme cost control and high similarity of product lines will catalyze a more brutal competitive situation, and the "race track competition" may be raging as early as early as early 2025. From 2025 to 2027, the organic silicon industry will usher in a new survival elimination race. In this regard, the company is determined to maintain its belief in growth and actively embrace changes in the track.
Looking ahead to the supply and demand landscape in 2025, the general manager conducted an in-depth analysis and pointed out that after both supply and demand sides showed weakness in 2024, the overall supply of the organic silicon industry will continue to exceed demand in 2025, but there are also some local highlights of supply-demand mismatch. He estimates that demand growth will remain in a moderate range of 3% to 5% between 2024 and 2025. However, the supply side will expand again on the basis of overcapacity, which will undoubtedly further compress the profit margin of the organic silicon industry chain in 2025. Nevertheless, industry giants with leading market share and stable cash flow are expected to demonstrate strong adaptability and competitiveness.
Market monitoring data shows that at the beginning of the new year, the prices of several niche organic silicon products have risen, especially on January 6th when the price of vinyl double head increased again. The underlying reason is directly related to the shortage of supply, especially the intensified supply tension of the vinyl double head series. As of January 7th, various silicone products including Luxi hydrolysate, DMC spot, raw rubber, 107 rubber, domestic and imported silicone oil have all reported new high prices.
It is worth noting that although the inventory of organic silicon monomer enterprises remained relatively low at the end of December (63600 tons), domestic monomer factories did not plan long-term shutdown and maintenance in January 2025, and only a few enterprises had short-term maintenance plans. It is expected that the monthly production will increase by about 6500 tons compared to December. Meanwhile, with the gradual completion of pre-sale orders, supply side pressure may intensify in the short term. Before the Spring Festival, in order to accelerate inventory reduction and attract orders, some individual factories may adopt price reduction sales strategies, thereby increasing the risk of DMC price correction.
In addition, the international situation also has an impact on the silicone industry. On January 6th, the US Department of Defense updated the list of "Chinese military enterprises" in the Federal Register, adding five companies including Tencent and CATL, bringing the total number of Chinese enterprises on the list to 134. According to relevant US laws, listed companies will be strictly restricted in their contractual dealings with the US Department of Defense, which undoubtedly adds new uncertainties to their international business.
In summary, by 2025, the organic silicon industry is entering a new stage full of challenges and opportunities. Enterprises need to keenly capture market dynamics and flexibly adjust their strategies to cope with the constantly changing industry environment.