Recently, several leading companies in the silicone industry have admitted that the current difficulties in the industry are closely related to the previous crazy expansion. In the past few years, due to optimism about the development prospects of the organic silicon industry, coupled with local government tax reductions and electricity price incentives, many enterprises have flooded into the industry, and leading manufacturers have also expanded on a large scale through various financing methods, resulting in a comprehensive oversupply in the industry.
At present, the organic silicon industry is still in the bottom adjustment stage, with the fundamental situation of oversupply remaining unchanged. Coupled with the downward trend in the export environment, some small enterprises lacking financial strength and economies of scale are facing the risk of elimination. The industry concentration is expected to continue to increase. This week, the DMC (dimethyl cyclic siloxane) market remained weak and stable, with minimal price fluctuations and a low trading center. The industry believes that prices will continue to operate at a low level in the future.
Despite the challenges faced by the industry, the concentration of the silicone industry has significantly increased in recent years, affecting downstream industries and accelerating the rate of concentration increase. Looking ahead to 2025, the inventory level of the organic silicon industry is expected to recover, and the year-on-year decline in downstream industry production is expected to narrow. From the perspective of going global, domestic organic silicon companies have established cracking plants in multiple Southeast Asian countries, resulting in lower competition and higher gross profit margins in overseas markets. However, the recent failure of a silicone company with a net profit exceeding 5 billion yuan to go public indicates that the industry is still in a severe period of development pains, and it has become increasingly difficult for companies to raise funds and go public.