Summary of the Organic Silicon DMC Industry Conference Industry Overview - The organic silicon industry is planning to reduce production by 30% starting in December to combat disorderly competition, similar to measures taken in the photovoltaic industry [1][2] - Four regulatory departments have been established to monitor capacity and output, with facilities installed for oversight [1][5] Key Points and Arguments - **Production Reduction Plan**: The industry will implement a 30% reduction in production from December 1, but companies can choose their own timelines to meet this target within a quarter or half-year [3][4] - **Current Operating Rate**: The current operating rate for DMC is around 70%, primarily due to oversupply from previous investments following price increases in late 2021 [4][13] - **Price Trends**: Organic silicon prices have started to rise, currently around 13,000 RMB/ton, with expectations to exceed 14,000 RMB/ton by December to cover full industry costs [7][10] - **Profitability**: While most companies are profitable based on cash costs, about half are still operating at a loss when considering full production costs [8][9] - **New Capacity Impact**: Xinjiang Qiya Chemical plans to add 1.6 million tons of organic silicon capacity, with the first phase of 400,000 tons expected to come online in mid-2026, which may alter market dynamics [11] - **Dow's Factory Closure**: Dow's German factory is set to close in early 2026 due to high costs and declining demand, indicating a shift towards sourcing materials from China [12] Additional Important Insights - **Regulatory Measures**: The conference established a more robust regulatory framework compared to previous production cuts, with periodic checks and a focus on long-term carbon reduction goals [6][18] - **Inventory Levels**: Current inventory levels are low, approximately less than two weeks, with no strict requirements for reductions based on inventory or losses [15] - **Future Demand Growth**: The organic silicon demand is expected to maintain a growth rate of 5%-7% annually, with significant contributions from sectors like electronics and renewable energy [24][26] - **Cost Structure**: DMC production costs are influenced by various factors, including raw material prices and depreciation, with significant differences among companies [25][27] Conclusion The organic silicon DMC industry is undergoing significant changes with planned production cuts, regulatory oversight, and evolving market dynamics due to new entrants and external factors. The focus on profitability and sustainable practices will shape the industry's future trajectory.