Organosilicone price reaches highest level in last 2 years in China, stock prices of leading industry players rise by nearly 50% in first half of year

Affected by Sino-US trade frictions and tariff increases in 2018, the price of organosilicone fell sharply in China. In the first half of this year, the coronavirus pandemic negatively affected demand from the downstream industry, but with the gradual recovery of the domestic economy, the downstream demand for organosilicone rebounded in the second half of the year. Therefore, the price of the product began to rise substantially.

At present, the price of organosilicone increased by 80% to over Yuan17,000 per ton in mid-September, which is a 123.57% increase compared to its lowest level at Yuan14,000 per ton in the first half of the year.

According to analysis by www.oilchem.net, the rising price of organosilicone is attributable to resumed market demand and limited supply resulting from frequent production accidents, which reduced supply and accelerated the product’s price increase.

In November 2020, a factory of Zhongtian Fluorine Silicone Materials Co., Ltd. in Quzhou, Zhejiang Province, witnessed an accidental explosion that affected the running of its 120,000-ton organosilicone monomer production line. Subsequently, the 150,000-ton plant of Zhejiang Wynca Group Co., Ltd. in Zhenjiang was shut down for inspection and maintenance. The 130,000-ton plant of Hesheng Silicon Co., Ltd. in Luzhou was also temporarily shut down. On 4th December, an accidental leak occurred in the monomer hydrolysis system of Dow’s Zhangjiagang plant, resulting in its shutdown, which further aggravated the short supply of organosilicone.

According to the analysis by www.oilchem.net, the prices of upstream raw materials hit their ceiling and may start to fall, and the organosilicone market is expected to decline in the near future. However, the production load of domestic manufacturers is not high, and manufacturers' inventories are also not high. Therefore, prices are not expected to decline sharply. 

Wynca is the only Chinese organosilicone manufacturer that has completely converted its self-produced monomer into downstream products. Its silicone monomer production capacity is 340,000 tons per year, while another 150,000 tons of organosilicone monomer capacity is under construction.

Hubei Xingrui, a wholly owned subsidiary of Hubei Xingfa Chemical Group Co., Ltd., currently has an annual capacity of 320,000 tons of organosilicone monomer.

Shandong Dongyue Organosilicone Materials Co., Ltd. is mainly engaged in the R&D, production and sales of organosilicon materials, with an annual output of 300,000 tons of organosilicone monomer, ranking it among the global top 10 organosilicone manufacturers and fourth in China.

At the end of December 17, Wynca’s stock price was 49.16% up from the start of June, Xingfa Group’s stock price was up by 26.78%, and Dongyue's stock price was 8.82% up.