Investment Rating - Industry rating is Neutral (maintained rating) [5] Core Viewpoints - The closure of Dow's UK plant is expected to accelerate the improvement of the industry supply-demand structure, as approximately 75% of global DMC capacity is concentrated in China. The exit of overseas silicone capacity is primarily due to cost and competitive disadvantages [2][9] - Dow's UK plant, which has a capacity of 145,000 tons, represents 30.5% of Europe's silicone capacity and 3.4% of global capacity. Its closure will significantly impact the European market, which is primarily focused on local consumption [2][9] - China's silicone demand is projected to grow at a CAGR of 15.5% from 2021 to 2024, with a potential price increase in 2025 due to improved supply-demand dynamics. The closure of Dow's UK plant may enhance China's export share to Europe [3][22] Summary by Sections Event - On July 7, 2025, Dow announced the closure of three European upstream assets, including the UK silicone plant, due to structural challenges in the region. The closure is expected to begin in mid-2026 and be completed by the end of 2027, with final dismantling by 2029 [1][9] Industry Analysis - The exit of overseas silicone capacity is anticipated to improve the supply-demand balance in the industry. Since 2015, overseas capacity has decreased from 1.35 million tons to an estimated 1.065 million tons by 2024, with a further reduction expected to 915,000 tons by 2026 [2][17] - China's silicone demand is expected to grow significantly, with a projected 12% growth rate in demand fields in 2025, while new capacity growth is expected to slow to 3% [3][22] Related Companies - Key recommendations include Xin'an Chemical, with a suggestion to pay attention to Hoshine Silicon and Dongyue Silicon [3][28]

Group 1 - The A-share market experienced slight declines in the three major indices, with the Shanghai Composite Index down by 0.03%, the Shenzhen Component Index down by 0.22%, and the ChiNext Index also down by 0.22% [1] - Despite the overall market downturn, sectors such as pharmaceuticals and robotics showed resilience, with several stocks like Lianhuan Pharmaceutical and Lisheng Pharmaceutical hitting the daily limit up [1] - The automotive parts sector saw a rally, with companies like Yingli Automotive and Xishanghai also reaching the daily limit up [1] Group 2 - The organic silicon sector faced adjustments, with stocks like Chenguang New Materials nearing the daily limit down [1] - The market showed a divergence with more stocks rising than falling, as over 3,200 stocks in the Shanghai, Shenzhen, and Beijing markets recorded gains, contributing to a total trading volume of 1.46 trillion [1]

Group 1: Industrial Silicon Market Dynamics - Recent rebound in industrial silicon futures prices, with the main contract rising by 3.27% and trading volume increasing significantly to 1.47 million lots [1] - The rebound is attributed to government efforts to regulate low-price competition in the photovoltaic industry, leading to an orderly exit of outdated capacity and focusing on high-quality development [1] - Leading companies in the industrial silicon sector are expected to benefit from the anticipated profit recovery across the industry chain [1] Group 2: Photovoltaic Industry Trends - The photovoltaic industry has shown signs of self-discipline, with industrial silicon experiencing a "V-shaped" rebound after a challenging period [2] - Demand for industrial silicon is currently weak, influenced by low operating rates in the polysilicon sector and a cooling of terminal demand [2] - Polysilicon prices have surged significantly, with a 39% increase from a low of 30,400 yuan/ton to a peak of 42,265 yuan/ton within 14 trading days [2] Group 3: Company Performance and Outlook - Hoshine Silicon Industry reported a projected net loss of 300 million to 400 million yuan for the first half of 2025, indicating a significant quarterly loss due to declining sales prices and operational disruptions [3] - The company aims to maintain stable operations and improve cost management to navigate the industry's downturn, focusing on optimizing production processes and enhancing efficiency [4] - Hoshine's organic silicon business provides a stable cash flow, enhancing its resilience compared to peers focused solely on the photovoltaic sector [4] Group 4: Organic Silicon Industry Insights - The organic silicon sector is witnessing a steady growth in demand driven by emerging fields such as electronics and manufacturing, while new capacity additions are nearing completion [5] - The closure of Dow's European production capacity may accelerate the global supply-demand recovery in the organic silicon industry, benefiting domestic companies like Hoshine [5]

Group 1 - The A-share silicon-based materials sector experienced a pullback during trading, with significant declines in several companies [1] - Hongbai New Materials hit the daily limit down, indicating a strong negative market reaction [1] - Other companies such as Feilu Co., Jitai Co., Chenguang New Materials, and Jihua Group also saw declines, following the trend set by Hongbai New Materials [1]

Core Viewpoint - The A-share market shows mixed performance with over 3100 stocks rising, while specific sectors like organic silicon and coal stocks demonstrate notable strength, contrasting with declines in real estate and certain financial sectors [1][2][3]. Sector Summaries Organic Silicon Sector - The organic silicon concept saw a significant afternoon rally, with Morning Light New Materials (晨光新材, 605399) hitting the daily limit and achieving a cumulative increase of over 33% in the last three trading days [6][9]. - Other companies in this sector, such as Morning Chemical (晨化股份) and Hongbai New Materials (宏柏新材), also experienced gains exceeding 6% [6]. - The demand for organic silicon products in China remains strong, driven by growth in electronics, new energy vehicles, and photovoltaic sectors, with expectations for continued demand increase [9][10]. Coal Sector - Coal stocks experienced a short-term surge, with Zhengzhou Coal Electricity (郑州煤电) reaching the daily limit and closing up by 5% [12][14]. - The electricity load in China hit a historical high, with a peak of 1.465 billion kilowatts, indicating a tight power supply and increased coal consumption expectations during the summer [15]. - Analysts predict that coal prices will maintain upward momentum due to high power plant coal consumption and low inventory levels [15][16]. Market Performance - The Shanghai Composite Index rose by 0.27%, while the Shenzhen Component and the ChiNext Index fell by 0.11% and 0.45%, respectively, indicating a mixed market sentiment [3].

Group 1 - The organic silicon concept increased by 1.64%, ranking 6th among concept sectors, with 31 stocks rising, including Morning Light New Materials which hit the daily limit, and others like Morning Chemical, Hongbo New Materials, and Heyuan Gas showing significant gains of 6.82%, 6.74%, and 5.94% respectively [1] - The organic silicon sector experienced a net outflow of 169 million yuan in main funds today, with 19 stocks receiving net inflows, led by Hesheng Silicon Industry with a net inflow of 40.92 million yuan [2][3] - In terms of fund inflow ratios, Demai Chemical, Xiangyuan New Materials, and Feilu Co. had the highest net inflow ratios at 8.96%, 7.83%, and 6.85% respectively [3] Group 2 - The top stocks in the organic silicon concept by net inflow include Hesheng Silicon Industry, Huaitian New Materials, and Fuxiang Pharmaceuticals, with respective net inflows of 40.92 million yuan, 30.94 million yuan, and 15.94 million yuan [3] - Stocks with significant declines include ST Hongda, Jin Yinhe, and Huasheng Lithium Battery, which fell by 1.69%, 0.96%, and 0.90% respectively [1][5] - Morning Light New Materials and Hongbo New Materials showed notable increases of 9.97% and 6.74%, respectively, despite the overall sector experiencing some outflows [5]

Group 1 - The core viewpoint of the article highlights the significant movement in the organic silicon sector, particularly the surge in stock prices of companies like Morning Light New Materials, which achieved a three-day consecutive limit-up [1] - The announcement from Dow regarding the closure of its siloxane facility in the UK due to cost pressures in Europe is a critical factor influencing the market [1] - The closure is expected to begin in mid-2026 and be completed by the end of 2027, affecting a production capacity of 145,000 tons of DMC, which represents 3% of global capacity and 13.7% of overseas capacity [1] Group 2 - Other companies in the organic silicon sector, such as Morning Chemical, Hongbo New Materials, Silica Treasure Technology, Runhe Materials, and Dongyue Silicon Materials, also experienced price increases following the news [1] - The market reaction indicates a potential shift in supply dynamics within the organic silicon industry due to the impending closure of Dow's facility [1]

Group 1 - The organic silicon sector experienced a short-term surge, with Morning Light New Materials (605399) hitting the daily limit up [1] - Other companies in the sector, such as Silicon Treasure Technology (300019), Huitian New Materials (300041), Runhe Materials (300727), Jianghan New Materials (603281), and Jitai Co., Ltd. (002909), also saw significant increases in their stock prices [1]

Summary of Key Points from Conference Call Records Industry Overview Chemical Industry - **Chlorinated Sugar Market**: The price of chlorinated sugar is expected to rise significantly as it is currently at a historical low. Manufacturers are pushing for price increases, with a potential profit increase of approximately 200 million yuan if the price rises by 10,000 yuan per ton for the 23,000 tons of capacity [1][2]. - **Chlorinated Sugar Supply and Demand**: The industry is projected to start collaborative efforts to counteract internal competition in 2024. Currently, there is an excess capacity of about 7,000 tons, but with a natural annual growth of 2,000 tons, supply-demand balance is expected to improve by 2026 [1][3][4]. Organic Silicon Market - **Market Conditions**: The organic silicon market has experienced a three-year bottom cycle, with supply-demand relationships improving. Demand is growing at an annual rate of approximately 15%, despite a decline in the construction sector [5]. - **Supply Adjustments**: The supply side has seen excessive investment in recent years, leading to a decrease in operating rates. Future adjustments in supply are critical to align with stable demand [5][8]. - **Foreign Investment Exit**: Foreign companies are actively exiting the organic silicon market, which may lead to significant changes in the supply side and create new opportunities for domestic companies [6][7]. Company-Specific Insights Jiurui New Materials - **Chlorinated Sugar Production**: Jiurui New Materials has a production capacity of 23,000 tons. A price increase of 10,000 yuan per ton could yield an additional profit of about 200 million yuan, indicating significant profit elasticity [2][3]. - **Strategic Plans**: The company is considering mergers and acquisitions to optimize pricing and enhance technology in response to industry competition [13][14]. Sanli Sugar - **Market Response**: Sanli Sugar's price increase has not been reflected in its stock price due to severe overcapacity. The company is attempting to reduce production to elevate prices, with market reactions to be observed in the upcoming quarters [15][16]. Jinhe Company - **Profit Potential**: Jinhe Company stands to benefit from price increases in chlorinated sugar, with potential profit increases of 70-80 million yuan for every 10,000 yuan price rise [4][16]. Additional Considerations - **Market Dynamics**: The organic silicon market is expected to reach a balance between supply and demand by the end of 2024, with no new large-scale expansions planned, which may stabilize prices and profitability [8][11][12]. - **Impact of External Factors**: The closure of Dow's peroxide plant in the UK has reduced European capacity by approximately 140,000 to 150,000 tons, positively impacting global supply optimization [7]. This summary encapsulates the key insights and projections from the conference call, highlighting the dynamics within the chemical and organic silicon industries, as well as specific company strategies and market conditions.

Core Viewpoint - Dow Chemical plans to close its organic silicon plant in the UK, impacting approximately 145,000 tons/year of siloxane capacity, which accounts for about 30.5% of Europe's total siloxane capacity as of 2024. This closure is attributed to high energy costs, stricter environmental regulations, and intensified global competition in the organic silicon industry [2]. Group 1: Dow Chemical's Plant Closures - Dow Chemical announced the closure of its ethylene cracking facility in Germany and its organic silicon plant in the UK, with the UK plant expected to close by mid-2026 [2]. - The closure of the UK organic silicon plant will significantly reduce the supply of organic silicon in Europe, potentially alleviating downward price pressure caused by global overcapacity [2]. Group 2: Policy Impacts on Organic Silicon Demand - Recent favorable policies in the photovoltaic and real estate sectors are expected to boost demand for organic silicon products. The Central Financial Committee emphasized the need to regulate low-price competition and improve product quality [3]. - The push for new urbanization and the recovery of the photovoltaic and construction industries are anticipated to enhance the overall demand for organic silicon, leading to improved industry conditions [3]. Group 3: Supply and Demand Dynamics - As of June 2025, domestic organic silicon DMC capacity is projected to remain at 3.44 million tons/year, with no new capacity expected in 2025. Although 1.85 million tons/year of capacity is planned for 2026-2027, delays are anticipated due to financial pressures on companies [4]. - The apparent consumption of organic silicon DMC in China from January to May 2025 reached 838,000 tons, reflecting a year-on-year growth of approximately 25%, indicating a steady increase in demand despite supply constraints [4].