In recent years, the silicone industry has been facing the dilemma of low prices. However, with the gradual improvement of the supply and demand pattern, this dilemma is expected to be reversed. Especially on the first trading day after the holiday, the rise in DMC prices has brought new hope to the industry.
From the supply side, overseas silicone enterprises are facing many restrictions such as environmental protection and cost, resulting in a contraction of production capacity. The newly added production capacity of the domestic silicone industry has been concentrated in 2024, and the future increment is limited. According to statistics from Baichuan Yingfu, 2024 is the peak period for the production of organic silicon, with a cumulative increase in production capacity of 605000 tons throughout the year; By 2025, only 100000 tons of new production capacity are planned to be put into operation. The change in production capacity pattern has provided strong support for the rise in organic silicon prices.
From the demand side, organic silicon products have a wide range of terminal applications, and both domestic and international demand are showing a rapid growth trend. According to SAGSI statistics, the consumption of organic silicon in China has increased from 1.15 million tons in 2019 to 1.85 million tons in 2023, with an average annual compound growth rate of 12.7%. It is expected that the growth rate of domestic organic silicon consumption will remain at around 11% in the next three years. Meanwhile, with the global economic recovery and the continuous expansion of organic silicon applications, the demand in the international market will also continue to grow.
The improvement of supply and demand pattern has provided strong support for the rise of organic silicon prices. However, it is also necessary to pay attention to some potential risk factors. Downstream demand falling short of expectations, new production capacity exceeding expectations, and significant fluctuations in raw material prices may all have an impact on the price of organic silicon. Therefore, while seizing opportunities, it is also necessary to remain vigilant and cautious.