As we know, Dow Silicone Co., Ltd., Shin-Etsu Chemicals Co., Ltd., Wacker Chemie A.G. and other well-known foreign silicone producers choose to continue to scale up the field of silicone deep processing. What are the changes and progress in the product layout of leading silicone companies in China? This week, Hubei Xingfa Group Co., Ltd. is thereby presented below.
01 Huge investment in R & D to transform into the high value-added industry
Xingfa Group has vigorously laid out high-end new material products in silicone in the past two years. In the first three quarters of this year, affected by macroeconomic and market supply and demand changes, the market prices of Xingfa glyphosate, organosilicon, yellow phosphorus and other cyclical products fell significantly year on year, and the production and sales volume also fell to varying degrees on the yearly basis, resulting in a sharp decline in product profitability. Xingfa said that the new microelectronic materials, special chemicals, high-end food additives and other growth products vigorously researched and developed in the early stage (newly added in 2022) have become an important source of the company's performance. Xingfa's advantages in circular economy industrial chain (high self utilization of resources and low energy consumption) also make it bear much pressure.
The positive feedback of sales of high-end products such as special chemicals cannot be separated from Xingfa's investment in R & D, which also proves that Xingfa's line of focusing on high-end products is feasible. Since 2021, the annual R & D investment of Xingfa has almost doubled. In particular, the R & D investment in the first three quarters of 2022 is nearly RMB 1 billion (RMB 1.23 billion for the whole year), accounting for 3.81% of the operating revenue.
Moreover, Xingfa has taken the lead in establishing a provincial-level laboratory - Hubei Three Gorges Dam Laboratory, focusing on five research areas: comprehensive utilization and harmless disposal of phosphogypsum, key microelectronic chemicals, high-end phosphorus based chemicals, silicon-based basic chemicals, and efficient chemical equipment and intelligent control.
Figure 1 Hubei Three Gorges Dam Laboratory, China
02 Confronting with challenges in the silicone market evolution
Xingfa group and Shenzhen Advanced Research Institute of Chinese Academy of Sciences jointly set up a national and local joint Engineering Research Center for silicone new materials, focusing on the research and development of high-performance silicone rubber, silicone resin, high-end silicone electronic materials and other silicon-based materials; ; It cooperates with Wuhan Branch of Shenzhen advanced academy of Chinese Academy of Sciences to develop microencapsulation industrialization technology, and has formed a 550 t/ a pilot production line; Aerogel felt has a stable production process, and Xingfa group has successfully developed the atmospheric drying ethanol free process of silica aerogel powder, reducing the material cost by RMB 30k/t.
03 Development of high-end products
(1) Organosilicon micro-capsule
Micro-capsule is essentially a rapidly developing material packaging technology, which is listed as one of the key high-tech research and development in the 21st century. According to the global and Chinese micro-capsule industry research and the 14th five year plan for 2023-2029, the global micro-capsule market will be about RMB 13.7 billion in 2022, and it is expected to reach RMB 32.7 billion in 2029, with a compound annual growth rate of 13.0% during 2023-2029.
On March 31, 2003, Hubei Xingrui silicon materials Co., Ltd. (a subsidiary of Xingfa group) packaged qualified micro-capsule emulsion products for the 2,200 t/a micro-capsule project (phase I for 550t). The project is a continuous micro-capsule production line with the largest output and the highest specification in China. At present, it has realized batch sales, and the product unit price is more than RMB 50k, with good profitability. Phase II (1.7kt) is under construction, and phase III (mainly for electronic micro-capsules) is under planning.
Figure 2 Xingrui has 2,200 t/a micro-capsule project in commissioning operation
(2) Aerogel
Aerogel is a kind of nano porous solid material, which is formed by sol-gel method, using a certain drying method to make gas replace the liquid phase in the gel. It is a solid material with the lowest thermal conductivity known at present. It is mainly used in the fields of thermal insulation, sound insulation, filtration and energy storage.
In 2015-2020, the scale of China's aerogel market increased from RMB 330 million to RMB 3.716 billion, with an average annual compound growth rate of 61.1%, and the market growth rate far exceeded the international average. It is estimated that by 2025, the global demand for aerogel will reach 1.6 million m3/a , and the market volume will reach $ 4.6 billion.
On April 24, 2023, the aerogel new material project with a total investment of RMB 11.1 billion started construction in Yichang New Material Industrial Park of Xingfa group, Yiting district, Yichang City, Hubei Province in China.
(3) Photovoltaic adhesive
In recent years, the application field and market demand of photovoltaic sealant have increased rapidly. In order to further increase the market share, on May 16, 2022, Xingfa group's 200 kt/a RTV (room temperature vulcanized silicone rubber) project was settled in Gucheng County, Xiangyang City, Hubei Province, with a total investment of RMB 5 billion.
The project is implemented by Hubei Ruijia Silicon Materials Co., Ltd. (a sub-subsidiary of Xingfa group), which mainly constructs the 200 kt/a photovoltaic adhesive with the matching 2 million tons of mining project.
Figure 3 Construction site of 200 kt/a RTV project
(4) Special silicone fluid
The market demand of organosilicon functional emulsion is more than 300kt per annum, of which the market demand of key additives as toiletries and cosmetics is more than 100 kt/a. The product has high added value and has a good market prospect.
Yichang Collin Silicon Material Co., Ltd., a sub-subsidiary of Xingfa Group, put into production the coming 3 special silicon fluids, namely, 3 kt/a silicone functional emulsion, 1 kt/a ultra-low volatile vinyl silicone fluid, and 1 kt/a ultra-low viscosity methyl silicone fluid.
(5) LSR for clinical use
According to the authoritative institutions, the global market sales of LSR (liquid silicone rubber) for clinical use in 2023 was about $ 600 million, and it is expected to reach & 1 billion in 2028, with a compound growth rate of about 12%. Currently, the core manufacturers of liquid silicone rubber for medicine mainly refer to some enterprises like Dow, Momentive, Wacker, Shin-Etsu, etc.
Xingfa group is building a 30 kt/a LSR project, of which Phase I project is scheduled to make the capacity of 15 kt/a by December, 2023, and Phase II project is to realize 15 kt/a LSR by December, 2024.
(6) Silicone leather
Silicone leather is a new material to replace traditional PVC and PU synthetic leather. It has excellent properties such as stain resistance, UV light resistance, high and low temperature resistance, solvent resistance and flame retardancy. It is predominantly used in automotive interior, medical devices, furniture and other fields. According to the latest report of the global silicone synthetic leather market 2023-2029 by the research team of QYResearch, it is expected that the global silicone synthetic leather market will reach $ 1.07 billion in 2029, and the CAGR in the next few years will be 34.1%.
On October 17, 2023, the pilot test of silicone leather developed by Xingfa group was completed, and the project construction would be started immediately after the samples testing was approved.
04 Summary
In general, most of the foreign silicone enterprises focus on R & D and sales of high-end new silicone products, and boast much cost to go on with those above. Although the profit has also declined, the net profit is still more than 10%.
In recent years, the rapid development of domestic semiconductor, consumer electronics and new energy markets have become the Apple in the eyes of global chemical enterprises. For the silicone industry, the silicone new material industry has paved the way for the fission and upgrading of traditional chemical industry to the new material industry. Many downstream silicone enterprises are also constantly exploring the advanced products in domestic substitution, and high-end silicone new materials will become a ladder for Xingfa to climb and struggle for, during which, it’s strongly believed that Hubei Xingfa Group will have conquered Dow and Wacker in advanced chemical materials production in future.
