Hydroxy Silicone Oil Prices Surge to RMB 28,000/Ton as Structural Shortages Reshape 2026 Market

SHANGHAI — The hydroxy silicone oil market is experiencing a powerful price rally in the second quarter of 2026, driven by a confluence of rising raw material costs, proactive production cuts, and resilient downstream demand.

According to data from 100ppi.com, domestic prices for hydroxy-terminated polydimethylsiloxane reached approximately RMB 28,000 per ton in early April 2026, marking a significant increase from earlier lows. This price surge reflects a “perfect storm” of supply-side constraints and cost-push inflation.

Cost-Push Pressure Intensifies

The upstream DMC (dimethylcyclosiloxane) market has been on a sustained upward trajectory since November 2025. By April 10, 2026, DMC prices had climbed to RMB 14,500–14,800 per ton, with suppliers showing little willingness to negotiate. Simultaneously, silicone ether—a key raw material for certain hydroxy silicone oil grades—surged to RMB 33,000–35,000 per ton amid shortages of trimethylsilane, marking a new high for the year.

These raw material cost increases have directly impacted hydroxy silicone oil production economics. For manufacturers of low-molecular-weight grades, the margin squeeze has been particularly acute.

Supply-Side Constraints: Production Cuts and Structural Scarcity

The supply-side story is equally compelling. Since November 2025, leading silicone producers including Hesheng Silicone, Dongyue Silicones, Xin’an Shares, and Xingfa Group have held three closed-door meetings, ultimately agreeing to a 30% production cut—the industry’s first genuine “anti-overcapacity” initiative in five years.

As a result, overall silicone monomer operating rates have fallen to approximately 65%, with multiple production lines undergoing maintenance in northern and eastern China. Spot supply has tightened considerably.

However, not all hydroxy silicone oil grades face the same supply constraints. Industry experts point to a structural divergence:

• Commodity-grade hydroxy silicone oil: Price increases are largely cost-driven, with ample production capacity and low shortage risk.

• High-end grades (medical-grade, electronic-grade, low-cyclic linear body): These rely on high-purity monomers and have longer production cycles. Smaller suppliers may face “no material, no delivery” scenarios.

A procurement manager at an East China personal care OEM told industry media: “In January, suppliers still offered quarterly quotes. By early February, it switched to weekly settlement with 50% prepayment required.” An electronic adhesive manufacturer similarly reported that its silicone oil supplier, constrained by DMC quotas, had paused new orders to prioritize chip packaging customers.

Demand Outlook and Policy Overhang

Demand for hydroxy silicone oil remains supported by its essential role in silicone rubber compounding—as a structure control agent, it has few cost-effective substitutes. The personal care sector also continues to drive consumption, with hydroxy silicone oil emulsions increasingly used in skin and hair care formulations due to their excellent spreadability and moisturizing properties.

However, a policy headwind looms. Effective April 1, 2026, China has canceled the 13% export tax rebate for primary shaped polysiloxane, a category that includes hydroxy silicone oil. This change adds approximately RMB 1,600 per ton to export costs, potentially dampening overseas orders in the second quarter.

Market Outlook

Looking ahead, analysts expect hydroxy silicone oil prices to remain firm in the near term, supported by high raw material costs and tight spot supply. However, the pace of further increases will depend on several variables: the trajectory of DMC prices, the duration of industry production cuts, and the actual recovery pace of downstream demand.

For buyers, 2026 presents a challenging procurement environment. As one senior silicone trader put it, “In 2026, suppliers with raw materials pick their customers. Those without wait in line.” Securing reliable supply from vertically integrated producers may prove the wisest strategy in this tightening market.