As the global silicone market remains active, industry consensus is clear: new silicone capacity in 2026 will be extremely limited. Inner Mongolia Xingfa plans to bring approximately 100,000 tons of monomer capacity online, while no other large-scale projects are expected in other regions. For downstream silicone oil manufacturers and procurement teams, this implies that the supply-demand balance is likely to remain tight in the short term.
From a supply chain perspective, the monomer → siloxane → silicone oil price transmission logic remains evident. Limited monomer output directly restricts the expansion of high-purity siloxanes and functional silicone oils. Once downstream demand rebounds—especially in high-end applications such as cosmetics, electronic thermal silicone oils, and industrial release agents—tight supply could drive gradual price increases. Historical data shows that when upstream monomer prices rise by 5%-10%, mid- to high-end silicone oil prices typically experience a lagged increase of 2%-5%.
For procurement managers and supply chain leaders, the key question is: how to secure supply while minimizing cost risk amid price fluctuations? Experts suggest a three-pronged approach:
Lock in long-term contracts and maintain reasonable inventory
Establish 6- to 12-month framework agreements with core suppliers to stabilize prices. Maintain 2-3 months of safety stock for critical products, especially high-purity chemicals and high-end silicone oil grades.
Assess supplier capacity and inventory capability
Go beyond pricing—evaluate suppliers’ monomer procurement channels, siloxane capacity, silicone oil inventory, and distribution strategies. Suppliers with self-owned monomer sources or long-term contracts have stronger supply reliability during tight market conditions.
Optimize product portfolio and prioritize core grades
Focus on securing high-demand, batch-critical grades first. Secondary or less critical grades can be procured flexibly or from multiple channels to manage short-term volatility.
In summary, 2026’s limited new silicone capacity suggests upward pressure on prices, though the extent may be manageable. Procurement strategies should focus on early planning, securing core grades, and evaluating supply chain resilience to mitigate potential volatility and ensure production continuity.
Understanding the full supply chain and anticipating risks is key to maintaining stable supply and optimizing costs in a fluctuating market.
