On October 10, 2017, Dow Corning and WACKER announced that they have raised the price of silicone products by 10%~15%; Fuhua Chemical, a large producer of glyphosate, raised the ex-factory price by RMB500/ton to RMB27,500/ton.


(1) Why is the price of silicone intermediates bullish in the medium and long term?


1 The future growth rate of organic silicon market demand is 4%~5%. The environmental protection pressure increases the threshold of new production capacity, and the supply and demand are tightly balanced.




2 short-term supply and demand mismatch. More than 30% of the production capacity of organic silicon is concentrated in Zhejiang and Shandong provinces. In August, the fourth batch of environmental protection inspection teams stationed in Zhejiang, Shandong and other major provinces, the overall operating rate of the industry declined, and the effective supply decreased.


3 The price of raw materials has risen sharply. The main raw materials are methanol and metal silicon. The price of metal silicon has increased by nearly 25% since July; the price of methanol has increased by 16%;




(2) Why can glyphosate reach 30,000 yuan / ton?




1 Raw materials rose. The main upstream raw materials of glyphosate, glycine and yellow phosphorus, rose. In July, glycine rose 92% and yellow phosphorus rose 20%.


At the beginning of 2017, overseas pesticide giants entered a new round of replenishment cycle. The general replenishment period lasted for 2 years, and the export volume of glyphosate will continue to improve in the next 2 years.


(3) Optimistic about Xin'an and Xingfa Group.


1 Xin'an Co., Ltd.: Silicone faucet, existing glyphosate production capacity of 80,000 tons, organic silicon monomer production capacity of 280,000 tons, silicone intermediate raw material metal silicon to achieve a large proportion of self-sufficiency, significant integration advantages, single-ton profitability


2 Xingfa Group: glyphosate faucet, existing glyphosate production capacity of 130,000 tons, organic silicon monomer production capacity of 160,000 tons, glyphosate upstream raw material glycine all self-sufficient, glyphosate cost advantage is significant, the spread is obviously obvious. At the end of September, the company acquired 51% equity of Xianlong in cash, and the target company's glyphosate production capacity was 50,000 tons. The integration of peers will consolidate the company's leading position.


*Disclaimer: The content of the article is for reference only and does not constitute investment advice.