Recently, China's silicone industry has demonstrated a series of positive changes. Under the combined influence of both the supply and demand sides, it is progressing towards a more stable development trajectory.

Stable Production Capacity Pattern, with the Expansion Peak Over

In the past few years, China's silicone industry has undergone rapid expansion, and its production capacity has increased significantly. According to data from Baichuan Yingfu, from 2019 to 2024, the domestic production capacity of silicone DMC rose from 1.515 million tons per year to 3.44 million tons per year. Currently, the pace of industrial expansion has slowed down. The only remaining planned new production capacity of domestic silicone DMC is a 100,000 - ton/year project, which is expected to be completed and put into production in June 2025. This indicates that the peak of domestic silicone expansion has ended, and the production capacity pattern is gradually becoming stable.

Strong Demand Growth and Broad Market Prospects

From the demand perspective, China's silicone industry is showing a booming development trend. Domestically, due to their excellent performance, silicone products have replaced traditional materials in many fields, and the consumption volume has been continuously on the rise. From 2019 to 2023, the consumption volume of silicone in China increased from 1.15 million tons to 1.85 million tons, with an average annual compound growth rate of 12.7%. In the new energy sector, room - temperature adhesives and high - temperature adhesives are continuously being driven by market demand. The expansion of new application fields has also brought incremental demand for liquid adhesives and silicone resins. The overseas market has also performed remarkably well. In 2024, the export volume of primary - shaped polysiloxanes in China was 546,000 tons, a year - on - year increase of 34.3%. The global economic recovery and the transfer of the production capacity of primary silicone products to China have led to the growing demand of foreign enterprises for Chinese polysiloxanes. With the global expansion of the application fields of silicone, China's export regions are becoming increasingly diverse, and the export market is further expanding.

Improved Supply and Demand, Expected to Usher in a Prosperous Cycle

Currently, the prices and price spreads of silicone are at the bottom of the cycle. However, with limited incremental supply and a steady increase in demand, the industry's supply - demand pattern is expected to continue to improve. It is estimated that in 2025, the production capacity of China's silicone industry is expected to reach 3.276 million tons, the operating rate will recover to 84%, and the output will reach 2.75 million tons. The industry will basically maintain a tight - balance state, and there may even be a supply - demand gap in 2026. In the long run, the new production capacity will be effectively absorbed, and the increase in the operating rate will drive the price to bottom out and rebound. The silicone industry is expected to usher in a new boom cycle. After experiencing rapid development in the early stage, China's silicone industry is entering a new stage of supply - demand optimization, and its future development prospects are very promising.