Major Developments in the Silicone Industry: Price Recovery, Supply-Demand Improvement, and Growth Driven by Emerging Sectors-Iota

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News > Dynamic industry > Major Developments in the Silicone Industry: Price Recovery, Supply-Demand Improvement, and Growth Driven by Emerging Sectors

Major Developments in the Silicone Industry: Price Recovery, Supply-Demand Improvement, and Growth Driven by Emerging Sectors

Significant price and profitability recovery indicate an industry cycle turning point. As of March 24, the benchmark market price of silicone DMC reached 14,400 yuan per ton, up 5.11 percent from early last month, continuing the upward trend since the beginning of the year. The average price of DMC has risen by 11.5 percent year-to-date, and for the first time, some leading companies have turned a positive gross profit, with a gross profit of 371.88 yuan per ton in the week of March 21.

On the supply side, the industry has implemented joint production cuts, with 1.82 million tons of capacity under maintenance, accounting for approximately 53 percent of total domestic capacity. Additionally, the production expansion cycle is coming to an end, with only Inner Mongolia Xingfa’s 100,000-ton-per-year project scheduled to start in June, leading to tight supply.

On the demand side, the peak season is approaching, and demand for construction and electronic appliances is steadily recovering. Furthermore, rapid growth in emerging sectors such as photovoltaics and new energy vehicles is accelerating inventory reduction.

China's domestic silicone DMC production capacity surged from 1.515 million tons in 2019 to 3.44 million tons in 2024. However, only an additional 100,000 tons are expected in 2025, significantly easing supply pressure.

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The industry's operating rate rebounded from a low of 67.5 percent in February to 80.69 percent. While some maintenance facilities are gradually resuming production, the overall industry continues to operate at reduced capacity.

On the demand side, both traditional and emerging sectors are driving growth. In traditional sectors, construction accounts for 25 percent of total consumption, and electronic appliances account for 23 percent. These sectors benefit from a recovery in the real estate sector, including an increase in second-hand home transactions and accelerated infrastructure investment, as well as consumption upgrades.

In emerging sectors, photovoltaics are experiencing rapid growth. With the global renewable energy expansion, silicone materials are widely used in photovoltaic module encapsulation and adhesion, with annual demand expected to grow by over 20 percent. The new energy vehicle industry is also driving demand. The use of silicone in battery sealing and lightweight components is increasing. In 2024, new energy vehicle production is expected to reach 11.71 million units, corresponding to approximately 210,000 tons of silicone demand.

China’s silicone intermediate exports are also showing strong growth. In 2024, exports reached 546,000 tons, a 34.2 percent year-on-year increase. The main export markets include South Korea, India, and the United States.

Industry concentration is increasing, and leading companies are strengthening their advantages. The top five domestic companies, including Hoshine Silicon, Dongyue Silicone, and Xingfa Group, account for over 62 percent of total production capacity, forming a highly concentrated market structure.

Leading companies are enhancing competitiveness through technological upgrades such as high-end silicone product development and industrial chain integration, such as Hoshine Silicon’s expansion into the full photovoltaic industry chain. Some companies have already raised their DMC ex-factory prices by 200 to 500 yuan per ton in February, demonstrating strong price support intentions.

Future trends indicate a shift toward high-end transformation and supply-demand rebalancing. The rising demand for high-end products is being driven by ongoing technological evolution in photovoltaics and new energy vehicles, increasing the need for high-performance silicone materials and pushing the industry toward technological advancements. With supply growth significantly slowing and only a 3 percent increase expected in 2025 while demand is expected to grow by over 5 percent, price and profitability recovery are likely to continue.

The silicone industry is currently at a turning point where supply-demand dynamics are improving, and the trend of price and profitability recovery is clear. Demand from emerging sectors is becoming the core driver of growth.

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