Growing Demand for High Temperature Vulcanized Silicone Rubber

By Tian Guopeng, CNCIC

The silicone market in China has always been hovering at the bottom in recent years, and competition is fierce. The sector of high temperature vulcanized (HTV) silicone rubber as a silicone downstream product is also affected by shrinkage of market sales, and the overall sales volume has not grown much. Owing to a drop of siloxane prices, however, the production cost of terminal products is reduced, and no great impacts are produced on the profit-earning ability.

Sustained growth of capacity

HTV silicone rubber has excellent high/low-temperature behavior, weather ageing resistance, electrical properties, air permeability and physical inertness. The HTV silicone rubber sector in China has therefore gained great development in the past decade. Foreign silicone rubber producers have established production bases in China. Domestic silicone rubber producers have expanded capacity. The average annual growth of HTV silicone rubber capacity in China was 8.4% during 2010-2014. The total capacity was 470 kt/a in 2014, and the operating rate was 74.5%. The HTV silicone rubber capacity in China will increase further in the next few years.
It is expected that with the release of new and expanded capacity, low-end product varieties will be in surplus in China in 2015, whereas the supply of medium and high-end product varieties will still depend on import, and the market gap will be around 20 kt.
HTV silicone rubber producers in China are mainly located in the Yangtze River Delta and the Pearl River Delta. Nanjing Dongjue Silicone Group Co., Ltd. and Jiangsu Hongda New Material Co., Ltd. are producers with considerable scale. See Table 1 for details.

Consumption structure

The apparent consumption of HTV silicone rubber in China was 335 kt in 2014, an increase of 6.3% over the previous year. HTV silicone rubber is mainly used in conductive buttons, electric wires/cables, insulators, kitchen utensils, medical apparatuses, automobiles and aviation/spaceflight. See Figure 1 for details.

Electric wires/cables
Electric cable components made of HTV silicone rubber include heat shrink varieties, cold shrink varieties, flame-retarding varieties and prefabricated varieties. They have gained extensive applications in recent years. For example, great quantities of electric cable components made of HTV silicone rubber were used in the construction of the Qinghai-Tibet Railway with extremely harsh engineering conditions. The consumption of HTV silicone rubber in this sector was 75 kt in 2014, accounting for 22% of the total. It is expected that with the demand growth in construction and special equipment manufacture, the average annual growth of the HTV silicone rubber demand in this sector will be around 8%.


Table 1   Major HTV silicone rubber producers in China

Producer    Capacity (kt/a)
Jiangsu Hongda New Material Co., Ltd.    80
Nanjing Dongjue Silicone Group Co., Ltd.    60
Dow Corning (Zhangjiagang) Silicone Co., Ltd.    50
Zhejiang Xinan Chemical Industrial Group Co., Ltd.    42
Zhejiang Hoshine Silicon Industry Co., Ltd.    15
ShinEtsu Silicone (Nantong) Co., Ltd.    12
Midgold Fine Performance Materials (Shenzhen) Co., Ltd.    10
Zibo Huaxing Silicone Material Co., Ltd.    10
Yangzhou Chenhua Sci-Tech (Group) Co., Ltd.    10
Zhejiang Fushite Group Co., Ltd.    10




Electronics and electrics
The consumption of HTV silicone rubber in electronics and electrics such as conducting buttons was around 68 kt in 2014, accounting for 20% of the total. With the ongoing replacement of traditional button products by contact electronics, the market volume of button products is shrinking today. As keyboards are getting smaller and thinner, the consumption of button rubber in the traditional sense will shrink drastically. The consumption of HTV silicone rubber in decorative, dust-proofing and protective sectors is however increasing rapidly. The consumption of HTV silicone rubber in daily electronic equipment will still increase, but the growth will slow down. It is expected that the average annual growth of the HTV silicone rubber demand in electronics and electrics will be maintained at 3-4% in the future.

Insulators
HTV silicone rubber insulators are third-generation products used to replace ceramic insulators and have evident advantages in high tension power transmission/transformation equipment. The consumption of HTV silicone rubber in insulators was around 42 kt in 2014. The commercial production of HTV silicone rubber insulators in China started in the mid-1990s. Owing to their excellent performance and declining prices, the consumption proportion of HTV silicone rubber in new power grids has reached over 60% since 2012. The consumption proportion in the entire insulator market is around 40%. The consumption proportion in insulating sleeves for lightning arrestors and mutual inductors is even higher. Application dissemination is also active in transformers, capacitors, switches and electrified railways. The construction of long-distance power grids with high tension or super high tension is just beginning in China and there is a huge growth space. It is therefore expected that the average annual growth of the HTV silicone rubber demand in making insulators will be around 9%.

Kitchen utensils
The demand for HTV silicone rubber in making kitchen utensils has maintained rapid growth in eastern coastal areas. New concentrated consumption zones have also formed in some places such as Ningbo of Zhejiang province. According to estimates, the consumption of HTV silicone rubber in making kitchen utensils was around 45 kt in 2014, and the average annual growth of demand is expected to be around 9% in the future.

Medical care and health
After clinical applications for decades, HTV silicone rubber as medical material is acknowledged by the medical circle, and its applications have become more and more extensive. In addition to medical equipment, great quantities of HTV silicone rubber are used in nipples of nursing bottles, corks of thermoses and tubes of food vending machines. The consumption of HTV silicone rubber in these sectors was 16 kt in 2014. It is expected that with the improvement of the standard of living and the popularization of medical care and health protection in both urban and rural areas, the average annual growth of the HTV silicone rubber demand in this sector will be maintained at around 8% in the next five years.

Others
Owing to its advantages in price and performance, HTV silicone rubber has gradually replaced synthetic rubbers in swimming equipment such as swimming goggles, swimming caps and general-purpose diving outfits. The output of swimming caps in China was over 80 million pieces in 2014. Around one third were made of HTV silicone rubber. Around 5 kt of HTV silicone rubber was consumed.
In electronics/electrics for automobiles, great quantities of wire sleeves for ignition units and cells, sensors, sleeves for spark plugs, switches/buttons, ABS control systems and ignition control systems made of HTV silicone rubber are already in use. The consumption of HTV silicone rubber in this sector was around 23 kt in 2014.
In addition, HTV silicone rubber is also widely used in internal wiring of control cables and electronic machines for power cables, nuclear stations and ships, as well as lead-out wires for motors and televisions. The consumption of HTV silicone rubber in these sectors was 21 kt in 2014.

Float at low prices

In China, silicon rubber is made in a great many varieties, and their prices vary considerably. The price trend of methyl vinyl silicone rubber (green stock) is used here to illustrate the status of HTV silicone rubber prices in China.
The market prices of HTV silicone rubber have declined overall here since 2010, basically following the price trend of the major raw material siloxane. The market prices of HTV silicone rubber declined steadily in the first half of 2014 and dropped to the all-time low of nearly RMB16 800/t in June. As prices of raw materials started to go up, the prices of HTV silicone rubber rebounded from July. Due to a sustained decline of raw material prices and inadequate drive of demand, the market prices of HTV silicone rubber dropped constantly in 2015. With the sustained price decline of raw material DMC and no signs stabilizing, HTV silicone rubber prices will continue to float at low levels in the second half of 2015. Figure 2 shows the price trend of HTV silicone rubber in China during 2010-2015.