This kind of chemicals rose by over 63% in January! Or to Q1 next year

Last Friday, silicones strengthened again.

The Silicone Index rose by 1.75%. Except for Huitian New Materials (300041.SZ), which closed flat and Xinyaqiang (603155.SH), which fell slightly by 0.92%, the rest of the stocks in the sector all closed red, Luxi Chemical (000830.SZ) Rising nearly 8%, Runhe Materials (300727.SZ) rose more than 4%.

Three factors catalyze

Silicone enters the era of "30,000 yuan"

In the first half of this year, affected by the epidemic, downstream purchases were cautious. Silicone prices continued to fall, reaching a record low of 14,000 CNY/ton at the lowest point. Except for integrated companies such as Hesheng Silicon (603260.SH), most silicone companies were in Loss status.

Since the third quarter, the price of organic silicon has rebounded, especially in November. On November 30, the average price of silicone DMC market quotations exceeded 33,000 CNY/ton, a monthly increase of over 63.40%. Among them, Shandong Luxi Chemical's quotation reached 34,500 CNY/ton. After a lapse of two years, silicone has returned to 30,000 CNY/ton.

Why is the silicone market so hot? Securities companies such as Essence Securities and CICC pointed out the rising logic behind it:

(1) September to November is the peak season for organic silicon sales;

(2) The overseas epidemic has spread, and the demand for silicone products in downstream fields such as medical and sanitation and household products has increased significantly;

(3) Overseas leaders in the organic silicon industry have gradually withdrawn, and the supply is insufficient.

Silicone is widely used

Prospects for industry recovery

Organosilicon, or organosilicon compound, refers to a compound that contains Si-C bonds and at least one organic group is directly connected to a silicon atom. At present, the main application is [Si-O-Si-O]n as the main chain and the other two groups on the silicon atom are methyl cyclosiloxane (DMC), which is what we often call organosilicon monomers. , The downstream accounted for more than 90%.

Silicone DMC has four excellent properties such as electrical insulation, high and low temperature resistance, heterogeneous high adhesion, and water resistance. It is widely used in aerospace, electronic and electrical, construction, transportation, food, medical and other industries. Its main function is to seal, Adhesion, lubrication, etc., have been called "industrial monosodium glutamate", "industrial vitamin" and "industrial catalyst" successively.

Essence Securities believes that in the future, organic silicon production capacity will be put into production, and driven by the natural growth of downstream demand such as new energy vehicles, photovoltaics, semiconductors, and 5G, the restocking and procyclical demand recovery, the increase in overseas demand and the transfer of domestic With both supply and demand booming, a new round of prosperity can be expected.

The upward trend may continue into the first quarter of next year

Brokers recommend paying attention to industry leaders

Due to the low entry barriers for organic silicon, the expansion cycle will take 2 to 3 years, and the industry is prone to imbalances in production and demand, resulting in a very strong cyclical characteristic of product price changes.

In the past 20 years, the global silicone industry has experienced two cycles from 1995 to 2005 and from 2006 to 2017, each of which has a boom period for one to two years.

Industry insiders predict that there will be 1.1 million tons of organic silicon production capacity in the country in 2021, but mainly in the second half of the year. This means that there is no room for expansion on the supply side of silicone in the short term, and prices will remain firm in the near future.

CICC also pointed out that the upward trend of organic silicon prices may continue into the fourth quarter of this year or even the first quarter of next year. But in the long run, with the release of Hesheng’s 400,000 tons of production capacity, the price of organic silicon will face a fall, which is expected to fluctuate between 16,000 CNY/ton and 20,000 CNY/ton.

Essence Securities said that after nearly two years of recession, silicone has entered a high profit range, and the prosperity is expected to continue to improve in the next year.

Brokerage firms are optimistic about the short-term opportunities for silicones. The price increase will significantly increase profitability. The industry leaders are expected to benefit. According to Essence Securities, for every 3,000 CNY/ton increase in the price of silicone DMC, the industry leader Xin'an (600596.SH) is expected to make profits. The net increase exceeds 400 million yuan. Brokers first launched Hesheng Silicon Industry, which has the largest market share, and Xin'an shares, which are flexible targets. In addition, it is recommended to pay attention to Dongyue Silicon (300821.SZ), Xingfa Group (600141.SH), Sanyou Chemical (600409.SH), etc.