Silicone Industry Accident in Shandong Triggers Supply Contraction – Over 1 Million Tons of Capacity Under Maintenance May Drive Up Market Prices-Iota

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News > Dynamic industry > Silicone Industry Accident in Shandong Triggers Supply Contraction – Over 1 Million Tons of Capacity Under Maintenance May Drive Up Market Prices

Silicone Industry Accident in Shandong Triggers Supply Contraction – Over 1 Million Tons of Capacity Under Maintenance May Drive Up Market Prices

Recently, China’s domestic silicone industry has undergone major changes due to a safety incident. A silicone monomer producer in Zibo, Shandong—ranked second nationwide and accounting for 8.8% of China’s total capacity—officially initiated a complete production shutdown today following a fire in the B-bed of its Phase III synthesis unit (new plant area). The affected capacity totals 600,000 tons per year, with no confirmed timeline for resumption. The fire not only damaged the plant, equipment, and inventory (this unit is a core raw material supplier for downstream products such as 107 silicone rubber and silicone oil), but also triggered an industry-wide upgrade in safety inspections, reshaping the domestic silicone supply landscape.

Notably, just one day after the incident, four major monomer producers in Shandong, Zhejiang, and Xinjiang—including the affected company—began simultaneous maintenance operations. The total capacity impacted by shutdowns exceeds 1 million tons, with the duration of maintenance yet to be determined. Industry analysts note that this large-scale production cut will significantly shrink the domestic silicone supply. In particular, 200,000 tons of the affected capacity may require long-term repairs, potentially disrupting the production of more than 490 downstream product types. Some long-term orders may shift to competing suppliers.

The market has reacted swiftly. Domestic silicone prices have continued to rise, with DMC (a basic silicone raw material) transaction prices surpassing 12,000 RMB per ton. Analysts predict that with over a million tons of production capacity temporarily exiting the market, the tightening supply could further push up prices and improve the short-term supply-demand balance.

The company involved is one of the few in China with a complete industrial chain—from silicon powder to monomers to deep downstream processing. In 2024, it served over 2,000 clients across more than 30 countries and regions. This incident and the subsequent maintenance will not only test the company’s recovery capabilities but may also accelerate industry consolidation.