Silicone prices continue to rise

Due to the strong growth of photovoltaic, industrial silicon has more downstream blockbuster items than organic silicon, so in terms of scale effect, industrial silicon has an advantage over organic silicon.

Although from the industry's leading financial results, industrial silicon gross margin of 25.86%, lower than 30.15% of organic silicon, but can not only rely on the gross margin of industrial silicon light.There are two reasons for this:

1. In the first half of last year, affected by the epidemic, photovoltaic and other industries fell briefly, bringing industrial silicon into the water as well, leading to the rise of industrial silicon inventory and the fall of the price to the bottom;

2. In the leading annual report of the industry, it can also be seen that the gross profit margin of industrial silicon is enlarged due to the faster decline of the cost, on the contrary, the gross profit margin of organic silicon is narrowed.

With the rapid price rise of products, no wonder the industry leader this year half annual report deduction fee net profit, directly skyrocketed 466%.But cyclical goods rise as fast as they fall, which inevitably raises concerns about the sustainability of the market.And for this problem, whether short-term logic, or long-term logic, are good sustainability:

1. Look at supply and demand in the short term.The downstream of industrial silicon organic silicon, photovoltaic polysilicon, will usher in the peak of production in 2022, then will stimulate the demand of industrial silicon.On the supply side, although summer is a wet season, the upgrade of power rationing in Yunnan province makes it difficult to release industrial silicon capacity.Therefore, the shortage of industrial silicon will continue in the short term;

2. Look at the valuation system in the long run.Is industrial silicon really a cyclical industry?Yes and no.The reason is that Chinese manufacturers have come to dominate the world's supply of industrial silicon.In recent years, China's industrial silicon annual net exports maintained at about 700,000 tons, accounting for about 30% of the total output.Moreover, this advantage is the result of cost leadership, such as overseas costs per ton is at least 9000 yuan higher than the domestic.