The position of the boss of glyphosate has already been established, Xinan shares are now increasing the weight of silicone.
In addition to the already existing 100,000 tons of organic silicon production capacity, the 100,000 tons of organic silicon production capacity of Xinan and Momentive is under construction. In addition, it will extend its hand to the upstream and downstream industries of silicones. One of the functions of the Suihua City Industrial Base is to solve its raw material problems, while the projects located in Hangzhou, Qingyuan and other places are responsible for further processing of the produced silicone. "The company's current development focus is shifting towards silicones," a researcher revealed.
At the same time, Xinan's Glyphosate capacity is also expanding. “The IDA method under construction for the first phase of the 25,000-ton glyphosate project is expected to be put into production in 2010,†said Cao Xin, an analyst at GF Securities.
"We have a lot of projects. We are currently proceeding according to the plan." Jiang Yongping, director of Xin'an shares.
As the country’s largest glyphosate producer and the second largest silicone producer, Xinan’s most outstanding achievement in 2008 was its glyphosate business—a surge in glyphosate prices in 2008. From the beginning of the year, the increase of about 8.8 US dollars, up to over 15 US dollars / kg. This not only makes Xinan shares make enough money, but also make enough money: the 2008 annual report shows that total operating income increased by 88.59% year-on-year, net profit increased by 239.73% year-on-year.
Silicone industry chain is in its infancy
Starting from the fourth quarter of 2008, the prices of glyphosate and silicone, two of the most important products of Xin'an, were running at lower levels, but the pace of its expansion did not stop. As Jiang Yongping said, the projects under construction by Xinan are “a lotâ€.
Most of the businesses are related to the extension of the silicone upstream and downstream industry chain, and more important are: 100,000 tons of organic silicon monomer joint venture with Momentive; 4.5 million tons of room temperature plastic; 20,000 tons of trichlorosilane; located in Qingyuan, Guangzhou The subsidiary's large 27,000 tons of high-temperature mixed rubber, 2 tons of liquid glue; 100,000 tons of silica in the first phase of Suihua in Heilongjiang 30,000 tons of silica.
Guangdong Qingyuan's 27,000 tons of high-temperature plastic project was completed in August this year, 20,000 tons of trichlorosilane can be put into operation within the year.
"100,000 tons of silicone monomer will also be completed in June and July as planned. The first phase of the 30,000-ton silica rock project in Suihua has already been trial-produced. The project has a total of four furnaces and currently one furnace is in production." Xin'an Dongqin Director Jiang Yongping introduced.
According to the 2008 annual report, in 2009, the company is expected to spend about 1.976 billion yuan for these projects.
Among these projects, the deuterated silica project is of great significance. Silica is an upstream raw material for the production of silicones. In the past, Xinan had a capacity of about 20,000 tons in Sichuan Aba Long, but in the earthquake, these production capacities were affected.
"At present, about 5,000 to 6,000 tons of production capacity in Aba Prefecture has been restored. It will take some time for other production capacity to recover." The above-mentioned researchers told reporters that the production of 1 ton of organic silicon may require 0.28 tons of silica. The current production capacity is far from meeting the demand for raw materials.
And once 30,000 tons of silica is fully put into production, combined with the recovery of 6,000 tons of silica production capacity in Aba Prefecture, it can also be used as a hoarder in addition to the production capacity of 100,000 tons of organic silicon monomer. After the 100,000 tons of organic silicon monomer project that is cooperating with MAGOTAN is put into operation, the self-supply rate of raw materials can also reach more than 85%.
In addition, Xinan has currently possessed the production capacity of 37,000 tons of high-temperature plastic, 10,000 tons of room temperature rubber and 10,000 tons of trichlorosilane. In projects under construction, the expansion to the downstream is also increasing.
Recycling
According to the above-mentioned researcher, in accordance with the production process of silicone, silica and hydrochloric acid are reacted and then oxidized and chlorinated. After that, another raw material, methylchlorosilane, is added to generate the silicone monomer. Methylchlorosilane is produced from the glyphosate production process.
According to the 2008 annual report, the 20,000-ton methyl chloride silane project of Xin'an has been completed, and in 2008 it generated an economic benefit of 43 million yuan. The project also links the two main operations of Xin'an, glyphosate and silicone, to form a complete industrial chain.
“Xin'an Co., Ltd. has created a unique 'glyphosate-chloromethane-silicone' recycling economy system to recover the waste gas chloromethane from the production of glyphosate for organic silicon production, and use hydrochloric acid as a by-product in the production of silicones. The production of glyphosate has realized the maximization of resource utilization. This is the company's highest value for organic silicon and glyphosate gross margin.†said Cheng Lei, senior researcher at Ping An Securities.
This cost advantage allows Xinan to have higher gross profit margins than its peers in both products. The 2008 annual report shows that the average profit rate of glyphosate is 42.46% and the profit rate of silicone is 34.81%. According to Ji Yunpeng of Shanxi Securities, even in the 11-1 month of the market's most sluggish period, the company's total product price is lower than the market price except for 10% glyphosate liquid.
This industry chain also appropriately reduces the risk of price fluctuations caused by a certain product - in the first three quarters of 2008, the company benefited from the soaring price of glyphosate, but then the price of glyphosate plummeted. The lowest fell to the level of about 3 US dollars/kg in early 2006.
This is probably one of the reasons why Xinan has increased its organic silicon production capacity. Subject to environmental protection policies, there is limited space for the expansion of glyphosate production capacity. Herbicides are used less in domestic agriculture and 90% of the products are used for export. Although its demand is relatively rigid and not affected by the financial crisis, the market is also relatively saturated.
However, domestic silicones have always faced the problem of too low-end products. As a leader in the industry, the project of cooperation between Xinan and Momentive is said to enable the purity of the monolithic silicon to reach above 99.5%, which is much higher than that of the same. Other levels of the industry have a stronger competitive edge.
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