Core Viewpoint - The global economic recovery, combined with the low prices of silicone, is expected to enhance the penetration rate of polyurethane and modified plastics in traditional application scenarios, leading to steady growth in downstream demand for silicone [1] Group 1 - The exit of high-energy-consuming capacities from companies such as Tenneco, Dow, and Wacker is anticipated to alleviate price competition within the industry [1] - The profitability of the silicone industry is likely to show a gradual improvement trend as a result of these changes [1]

Core Viewpoint - The peak of silicone production has passed, leading to joint production cuts by companies, resulting in a rise in product prices from the bottom [2] Group 1: Production and Capacity - Domestic silicone DMC capacity increased from 1.515 million tons/year in 2019 to 3.44 million tons/year by 2024, with limited new capacity expected in the future [2] - The only remaining new capacity is a 100,000 tons/year project by Inner Mongolia Xingfa Technology, expected to be operational by June 2025 [2] - As of February 19, 2025, 1.82 million tons of silicone monomer capacity is under maintenance, indicating a significant reduction in domestic supply [2] Group 2: Price and Profitability - Silicone prices have shown a significant upward trend in 2025, with the market average price reaching 14,500 yuan/ton by March 20, 2025, an increase of 11.5% since the beginning of the year [2] - The gross profit for silicone reached 371.88 yuan/ton as of March 21, 2025, marking the first positive gross profit since the beginning of the year [2] Group 3: Demand and Market Outlook - The apparent consumption of silicone DMC in China increased from 1.21 million tons in 2020 to 1.82 million tons in 2024, with a CAGR of approximately 10.7% [4] - Key application areas for silicone DMC include construction and electronics, accounting for 25% and 23% of consumption, respectively [4] - Exports of silicone DMC have grown rapidly, with a CAGR of 22.5% from 2020 to 2024, while imports have declined, indicating advancements in domestic production capabilities [4] - The demand for silicone materials is expected to rise significantly due to the growth in photovoltaic and new energy vehicle sectors, which will also increase the demand for high-end silicone materials [4]