With the end of the Chinese New Year holidays in the Year of the Snake, China's silicone market ushered in a new round of development opportunities. In the supply and demand pattern continues to optimize, steady growth in downstream demand and policy support, the silicone industry is gradually out of the bottom of the cycle, the market is expected to be good, is expected to open a new round of boom cycle.


First, the supply and demand pattern improvement, industry tight balance situation appeared
According to the latest industry data show that in 2025 China's silicone production capacity is expected to reach 3.276 million tons, the start rate rose to 84%, production will exceed 2.75 million tons. Despite the continuous expansion of production capacity, but the strong growth in demand effectively digested the incremental supply, the market as a whole showed a tight balance. From the consumption point of view, domestic silicone consumption in 2025 is expected to reach 2.311 million tons, an increase of 11.3% year-on-year, mainly benefiting from the rapid development of new energy, electrical and electronic fields.


In terms of overseas markets, China's silicone exports continue to climb, with a year-on-year growth of 34.3% in 2024, and the export region is further decentralized, with the traditional markets such as South Korea, India, and the U.S. accounting for a declining share, and the contribution of emerging markets increasing. This trend shows that the international competitiveness of domestic silicone products has gradually increased, the global market share continues to expand.


Second, the price bottomed out, market confidence increased
As of the end of January 2025, the market price of silicone DMC in East China was RMB 12,800/ton, still at the cycle low. However, with the marginal improvement in supply and demand, prices have shown signs of recovery. IFC Securities research report pointed out that the current silicone prices and spreads are located at the bottom of the history, the future in the supply and demand relationship to improve the drive, the price is expected to enter the ascending channel. It is expected that in 2026 there may be a gap between supply and demand, further driving prices upward 511.


In addition, after the Spring Festival, downstream enterprises replenishment demand release, superimposed on the growth of overseas orders, the market trading activity increased significantly. Industry analysis, with the start rate repair and inventory level rationalization, industry profitability space will gradually open.


Third, downstream application diversification, emerging areas of demand explosion
Silicone materials are widely used in traditional and emerging fields due to its high temperature resistance, corrosion resistance, strong insulation properties:


New energy field: photovoltaic module sealant, lithium battery encapsulation materials, such as rapid growth in demand, become the core driving force of silicone consumption.


Electrical and electronic: 5G communications, smart wearable devices and other high-precision manufacturing areas of silicone sealant, potting adhesive demand continues to climb.


Construction and transportation: green building demand for energy-saving sealing materials is stable, and the trend of lightweight new energy vehicles to promote the expansion of silicone applications in parts and components 268.


It is worth noting that the accelerated research and development of environmentally friendly, functional silicone products to further expand the medical, aerospace and other high-end markets, injecting new momentum into the industry growth.


Fourth, the industry challenges and future prospects
Despite the optimistic market outlook, the silicone industry is still facing multiple challenges:


Environmental pressure: the production process of energy consumption and emissions standards are tightening, forcing enterprises to speed up the green process upgrade.


High-end products rely on imports: some high-performance silicone materials still need to be imported, domestic substitution space is vast.


Looking ahead, with the domestic capacity expansion into the end of the new overseas supply is limited, coupled with sustained growth in the demand side, the silicone industry is expected to usher in a supply and demand mismatch driven boom cycle in 2025-2026. Technological innovation and industry chain integration will become the key to corporate competition, and industry concentration may be further enhanced.


Conclusion
After the spring of the Year of the Snake, the silicone market showed a strong recovery momentum under the resonance of supply and demand optimization and emerging demand. The industry from the “quantity increase” to “quality rise” transformation trend is clear, the future in the policy support and technological breakthroughs under the dual assistance, silicone materials are expected to shine in more areas, to provide solid support for global industrial development.