Organosilicon Monomer is the main raw material for producing silicone rubber, silicone oil, silicone resin and silane coupling agent, and it’s also the basic material of the whole organic silicon industry. There are many kinds of organosilicon monomer, including methyl chlorosilane, phenyl trichloro silicane, vinyl/phenyl/ethyl chloride/hydric silane, methyl phenyl silane and silane alkoxy silane. Among them, methyl chlorosilane, phenyl trichloro silicane, vinyl monomers and alkoxy silane are most widely used in China. In addition, others monomers such as chloro phenyl chlorosilane and methyl pheyl chlorosilane monomers also have small amont of application in china.
Methyl chlorosilane monomer has the dominant position in the whole industry of organic silicone monomer, and other monomers such as phenyl trichloro silicane and vinyl monomer in silicone only accounted for less than 10%. Therefore, organic silicone monomer discussed here mainly refers to methyl chlorosilane monomer.
After prosperity for several years, in 2013, China organic silicon market began its industrial consolidation and eliminated the outdated production facility. After a tough time in 2012, the market has not recovered as expected, and not to mention the traditional busy seasons. The traditional off-seasons were June, July and August, mainly due to the high temperature, less terminal industry order and low operating rate. However, the domestic market experienced a rising trend from the end of May in 2013, which was completely inconsistent with previous off-season trends. The main reason is supply shortage of raw materials and some monomer enterprises’ maintenance. Besides, the overall downturn of domestic organic silicon industry also increased the market lags in 2013.
1.Acceleration of the industrial Consolidation
In recent years, the capacity of organic silicon monomer has grown rapidly in China. In 2009, the production capacity of organic silicon monomer was 935KTA, and soared to 1,800KTA in 2011, causing periodical excess of the production capacity. Especially, the establishment of the monomer device in Dow Corning base of Zhang Jiagang made a great impact on the Chineseorganic silicone monomer markets, with the advantages of its large production scale, advanced technology and low costs. In addition, with the weak market environments, poor sales, the rising cost of fuel, power and manual and other unfavorable factors, monomer enterprises operated in low operating rate, with greatly reduced economic benefits. And some enterprises appeared huge lose. The organic silicone industry in 2012 fell to the bottom. In 2013, with the industry integration, the operating rate of major monomer enterprises reached 90%. Leading enterprises began to appear, and some monomer enterprises became profitable, especially the organic silicone downstream enterprises. It’s worth noting that Zhenjiang Jiangnan Chemical Co., which was the wholly-owned subsidiary of Xinan Zhejiang, announced to acquire the organic silicone monomer plants of Jiangsu Hongda New Material Co., Ltd. in October, 2013, further accelerating the integration of this industry. By the end of 2013, there were 14 silicone monomer enterprises in China, and the total production capacity of 2,165KTA. The actual output was about 1,420kt, with a growth rate of 20.3% compared with last year. The actual device operating rate of Chinese organic silicon monomer was about 66% in 2013, which was the highest level in recent years. Table 1 shows the main production enterprises of organic silicon monomer in China in 2013.
In 2014, the domestic silicone market is overall good, with low manufacturers inventory and short market supply. In the first half of the year, domestic organic silicone monomer enterprises began to release the new capacity. The operating rate of monomer plants has a year-on-year slight rise, and shutdown costs and production profits have become the main factors that enterprises need to consider. It can be expected that the output of organic silicone monomer in 2014 will not greatly increase compared to 2013, which is about 1.5 million tons, but also achieving a new high in recent years.
2.Silicon Rubber is the Main Downstream
Silicone monomer is mainly used in the production of silicone rubber, silicone oil and silicone resin. In 2013, Chinese consumption of organic silicon monomer (equivalent to 100% polysiloxane, the same below) was 708,000 tons, with a year-on-year growth rate of 16.4%. The consumption structure of organic silicone monomer in China in 2013 is shown in figure 1.
Silicone rubber is mainly used in electric power and electronic industry, including in the products of plastic keys, high voltage insulator, wire and cables. It’s also used in the industries of machinery, automobiles and toys, with far lower consumption than developed countries.
In 2013, the production of vulcanized silicone rubber of high temperature in China was about 345,000 tons, with organic silicon monomer consumption of 238,000 tons, accounting for 33% of the total monomer consumption.Room temperature vulcanized silicone rubber is mainly used in the construction, industries and mold etc. In 2013, the production of it was about 640,000 tons, with organic silicon monomer consumption of 316,000 tons, accounting for 45% of the total consumption.Liquid silicone rubber in China is mainly used for computer keyboard keys, medical catheter, plastic nipple, cake mould, auto accessories, silicone tube, sealing ring, silicone products, high-pressure film, electronic products and toys, silicone rubber products, silicone kitchenware, sports equipment or accessories, and automobile pipe fittings, sealing ring of automobile door,automobile wiper parts etc. In 2013 Chinese production of liquid silicone rubber production was about 17,000 tons, with organic silicon monomer consumption of 14,000 tons, accounting for 2% of the total consumption.
Silicone oilcan be used in many fields, including industries of textile, chemicals, defoaming agent, lubricant and surface treatment agent. In 2013, the output of silicone oil in China was about 132,000 tons, with organic silicon monomer consumption of 134,000 tons, accounting for 19% of the total consumption.
Silicone resin has a small proportion in the whole market of silicone materials. Silicone resin and modified silicone resin products, with excellent thermal oxidation stability, electrical insulation, weather resistance, and waterproof, anti-salt, anti-fungal and biocompatibility characteristics, are widely used in national military industry, electrical industry, leather industry, light industrial products, rubber plastic, food hygiene and other industries. In 2013, the production of silicon resin was about 20,000 tons, with organic silicon monomer consumption of 6000 tons, accounting for 1% of the total consumption.
3.Depressed Price Trend
In 2013, DMC prices increased from 16600 yuan/ton to the highest level of 17500 yuan / ton in the traditional off-seasons from June to August.
In the first half of 2014, the domestic silicone market was still in downturn, with DMC price vibrating down. More specifically, DMC price in April was below 16000 yuan/ton, and then continued going down to the bottom of 15600 yuan/ton. From the current market situation, the organic silicone market is still in the doldrums, mainly affected by the macroeconomic situation. In the next few years, with the recovery of downstream demands, as well as the expanding application of new organic silicon products, excess capacity of domestic DMC will be gradually consumed, and the price will maintain a reasonable rising space. Domestic DMC price trend from 2010 to 2014 is shown in Figure 2.
4.Optimistic Prospects
Although Chinese organic silicone industry is affected by the factors such as excess capacity, weak recovery fromconsumer market, and inadequate product development, the organic silicon industry in China is developing towards a higher level on the whole. The downturn of organ silicon monomer market is just temporary, and the organic silicone industry will enjoy rapid developments with broad prospects.