According to the China Chemical Industry News, the silicones market has recently seen across-the-board strength, with major manufacturers suspending sales to support prices and a strong reluctance to sell. Currently, the average price of the mainstream domestic dimethylcyclosiloxane (DMC) mixture has risen by RMB300–500 (per tonne, same below), whilst prices for 107 silicone rubber and dimethyl silicone oil have also increased by around RMB200.
Industry insiders indicate that the current silicone market is characterised by cost support at the bottom, continuous optimisation of supply, and steady growth in demand. The industry is gradually shifting from past ‘cut-throat’ competition towards orderly development and is set to reach a turning point in profit recovery.
Significant cost advantages on the raw materials side. The primary raw materials for silicone production are metallurgical silicon and methanol. Among these, metallurgical silicon is the most critical raw material, accounting for a far higher proportion of production costs than methanol. Currently, metallurgical silicon prices are fluctuating at low levels and have not followed crude oil and methanol prices in rising sharply. Compared to overseas enterprises, domestic silicone manufacturers possess significant cost advantages.
The supply side continues to optimise. Since November 2025, the domestic silicone industry has held six consecutive meetings, centred on restoring profitability. Recently, upstream monomer producers have continued to implement production cutbacks, which has directly reduced effective supply at the source, completely reversing the previous pattern of blind expansion and vicious low-price competition.
Furthermore, there will be virtually no new domestic silicone production capacity in 2026, with only a small number of planned projects due to come on stream in 2027. Coupled with leading enterprises proactively cutting production, this has resulted in low inventory levels. Against this backdrop, the domestic silicone market is gradually shifting from a previous state of oversupply to one of tight supply-demand balance, providing core support for price increases.
Turning to the international scene, global chemical giant Dow previously announced that it would gradually shut down 145,000 tonnes per annum of DMC capacity at its UK plant from mid-2026, with the withdrawal expected to be completed by the end of 2027. Its successive capacity adjustments and unexpected production halts are continuously exacerbating global supply tightness in silicones and upstream raw materials, serving as the core catalyst driving a new round of price increases for silicones.
Demand is also growing steadily. Domestic silicone products are primarily exported to South Korea, Europe and the United States, with overseas demand dominated by the electronics and electrical sectors, whilst domestic demand is concentrated in the construction sector. Although traditional construction demand remains relatively weak, the explosive growth in demand from downstream new energy sectors—particularly photovoltaics and new energy vehicles—is driving steady growth in silicone demand.
At the same time, the rapid development of the AI and robotics industries has also generated entirely new demand for silicones. Among these, emerging applications such as robotic skins and sealing, thermal management and insulation components for AI-related end devices are set to drive sustained growth in demand for silicones. Overall, the demand side of the silicone industry is characterised by ‘robust and stable traditional demand coupled with continuously expanding emerging demand’.
Financial reports from silicone enterprises also confirm that the industry is recovering. On 3 April, Dongyue Silicone Materials released a profit forecast indicating that the company’s net profit attributable to shareholders for the first quarter is expected to range from 183 million to 203 million yuan, representing a year-on-year surge of 397% to 451%.
“However, certain risk factors warrant attention. With the formal abolition of the export tax rebate policy for polysiloxanes on 1 April, coupled with the rush to export by some overseas clients in the preceding period, export orders may face temporary downward pressure in the second quarter. Furthermore, fluctuations in European natural gas prices may still affect the pace of local capacity exits, whilst adjustments to production schedules by leading domestic enterprises following improved profitability will also impact the supply landscape. ”Liu Renlu, a researcher at the Guohua New Materials Research Institute, stated that, taken as a whole, the silicone industry is gradually shifting from the previous ‘involutionary’ competition towards orderly development, and the logic of profit recovery is being realised. However, the upside potential for prices still requires dynamic assessment in light of factors such as the pace of demand realisation, changes in export orders, and the strength of companies’ efforts to maintain prices.
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