Hongda New Material Improved Silicone Rubber Industrial Chain      

Jiangsu Hongda Chemical New Material Co., Ltd. (Hongda New material, SZ: 002211) is located in Yangzhong, Jiangsu province. It got listed in Shenzhen Stock Exchange on February 1st, 2008. (CCR2008, No. 3) The company mainly produces silicone monomers and high-temperature silicone rubber series. The capacity of silicone monomers and products of silicone rubber series reached 30 000 t/a and 28 000 t/a respectively at the end of 2007. The sales volume of high-temperature silicone rubber compound has grown steadily at 30% a year. The company's high-temperature silicone rubber capacity is still being expanded today and will hopefully reach 50 000 t/a at the end of 2008.

Ongoing prosperity of the high-temperature silicone rubber sector   

In spite rapidly growing capacity and output in recent years, China silicone rubber supply shortage will become even more serious in the next few years because of the rapid development of downstream sectors. According to the projection made by China National Chemical Information Center, the demand for high-temperature silicone rubber in China will increase at a rate of around 15% annually from 2008 to 2011 and will reach more than 255 000 tons in 2011. The amount of market supply shortage in 2011 will be 65 000 tons and the self-sufficient rate will be down to 74.5%, being the lowest in recent years. High-temperature silicone rubber makers can therefore maintain a relatively high rate of gross profit and the sector's prosperity will last for quite a long time.
   Major high-temperature silicone rubber producers in China include Hongda New Material, Dongjue Silicone Group Co., Ltd. (Dongjue Silicone) and Shenzhen Tianyu High Polymer Materials Co., Ltd. (Shenzhen Tianyu). The only producers with an output of over 10 000 tons at the end of 2006 were Hongda New Material and Dongjue Silicone. Enterprises that plan to expand production capacity in the coming years include Hongda New Material, Zhejiang Xinan Chemical Industrial Group Co., Ltd. and Dow Corning (Zhangjiagang) Silicone Co., Ltd. Hongda New Material will increase its domestic market share as a major high-temperature silicone rubber producer.

The upstream/downstream industrial chain is basically formed   

The main-business revenue and the profit of Hongda New Material in 2007 mainly came from the high-temperature silicone rubber business. The capacity and the output of the company's high-temperature silicone rubber reached about 28 000 t/a and 25 000 tons respectively in 2007, both at the top position in China. With the smooth trial production of the 30 000 t/a silicone monomer project in August 2007, (CCR2007, No. 27) the company has basically formed a complete high-temperature silicone rubber upstream/downstream industrial chain. The company's output of silicone monomers reached around 15 000 tons in 2007 and more than one-third of monomers needed for silicone rubber production was supplied by the company itself.
   The company raised RMB610.9793 million through the IPO in early 2008 for executing a 30 000 t/a silicone rubber expansion project, a 45 000 t/a silicone monomer project and constructing a R&D center. The completion of 30 000 t/a silicone rubber expansion project will further increase the capacity to make existing products, satisfy the specific demand of users for various products and enhance the profit-earning ability and the risk-withstanding ability of the company. The 45 000 t/a silicone monomer project will be located in Zhenjiang New District Chemical Industry Park, and the project will provide reliable raw material for the production of other follow-up products and reduce risks of centralized raw material purchase in the company. After the completion of the silicone monomer project, the company will establish high-temperature silicone rubber in-depth processing bases in Yangzhong, Jiangsu province and Dongguan, Guangdong province. These projects are expected to be completed in 2010. With successive startup of fund-raising projects, the industrial chain of high-temperature silicone rubber in the company will become all the more refined.

Comprehensive competitiveness will improve further   

Before the fires half of 2007, siloxane was the most important raw material for the production of high-temperature silicone rubber in the company. After the smooth completion of the 30 000 t/a silicone monomer project in 2007, the gross profit rate gained from high-temperature silicone rubber increased by more than 3.0 percentage points, to reach 22.72% at the end of 2007 and further increased to around 24% in the first quarter of 2008. With the stable operation and process improvement of the silicone monomer unit, production efficiency will be upgrade constantly and the gross profit rate in the company will be kept stable with a little growth.