In November 2025, the silicone industry is undergoing multi-dimensional structural changes on both the supply and demand sides, entering a crucial transformation period characterized by "internal capacity adjustments and external market expansion."
On the supply side, there is a stark contrast between domestic overcapacity and the exit of overseas production. According to data from the China Silicone Industry Association, the domestic production capacity for silicone monomers reached 6.8 million tons in early 2025, a 24.8% increase from 5.45 million tons in early 2024, highlighting the issue of overcapacity. More importantly, there are still 400,000 tons of new capacity under installation, which is expected to be put into production in the first quarter of 2026, further intensifying competition in the domestic market.
In contrast, the overseas market is facing a very different situation. Due to high energy prices, rising raw material costs, and other factors, international chemical giants like Dow and Wacker have announced plans to cut some of their silicone production capacities. For instance, Dow plans to shut down 150,000 tons of monomer capacity in Europe, with the closure expected to be completed by the end of 2026. The exit of overseas production capacity presents a substitution opportunity for domestic companies. From January to October 2025, China’s silicone exports reached 820,000 tons, a 18.3% increase compared to the previous year, with exports to the European market growing by more than 30%.
On the demand side, the new energy sector has become the core growth engine. The silicone usage per vehicle in new energy vehicles has increased by more than 100% compared to traditional fuel-powered vehicles. Overseas demand for solar photovoltaics is growing at a rate of around 20% year-on-year. Meanwhile, the development of infrastructure and new energy projects in emerging markets like the Middle East and Africa has driven steady growth in demand for traditional silicone products. Additionally, with expectations of tariff reductions between China and the U.S., domestic silicone companies are accelerating their expansion into overseas markets, further optimizing the industry’s supply and demand structure.
