China's silicone industry is undergoing a critical transition period from scale expansion to high-quality development. As the world's largest producer and consumer of silicone, China's silicone market will face a complex situation in 2025 with structural overcapacity and diversified demand growth. This article will deeply analyze the supply and demand balance of China's silicone market in 2025, analyze the industry's competitive landscape and concentration trend, explore the development prospects of traditional and emerging application fields such as construction, electronic appliances, and new energy, and predict price trends and profit levels to provide comprehensive market insights for relevant practitioners.


Evolution of supply and demand pattern: from overall oversupply to structural adjustment
In 2025, China's silicone market will continue the basic trend of oversupply, but the degree of oversupply will be alleviated compared with 2024. According to the forecast data of SMM (Shanghai Nonferrous Network), China's industrial silicon (key silicone raw materials) market will show a significant oversupply in 2024, with an estimated annual supply of 5.67 million tons, a year-on-year increase of 28%, and this oversupply situation will improve in 20251. This improvement is mainly due to two factors: on the one hand, some high-cost production capacity has gradually withdrawn from the market since the fourth quarter of 2024; on the other hand, downstream demand for silicone has maintained steady growth driven by new energy, electronic appliances and other fields.


From the perspective of capacity expansion rhythm, 2021-2024 is the concentrated expansion period of China's silicone industry, with a cumulative increase in production capacity of more than 1.6 million tons. In 2025, the pace of industry expansion has slowed down significantly. Currently, only a few companies such as Inner Mongolia Xingfa may land 100,000-ton projects. This slowdown in supply growth will effectively ease market pressure. According to Zhongyuan Securities Research Data, China's silicone intermediate production capacity has reached 3.53 million tons/year in 2024, an increase of 115.24% over 2019, while the new capacity in 2025 is expected to be less than 3%, and the capacity utilization rate is expected to rebound from the low of 71.43% in 2024 to more than 75%.


The regional supply structure is also undergoing significant changes. With its energy and raw material advantages, Xinjiang has become the largest silicone production base in the country. In 2024, the proportion of industrial silicon supply in the country will reach 54%, an increase of 7 percentage points from 2023. In contrast, the proportion of traditional production areas in Sichuan and Yunnan has continued to decline, and has dropped to 22% in 2024, a decrease of 16 percentage points from 2022. This increase in regional concentration will further strengthen the cost advantage of leading companies and accelerate industry integration.


From the inventory level, the social inventory of industrial silicon is still at a high level. As of October 2024, the national social inventory of industrial silicon totaled 498,000 tons, of which the inventory of delivery warehouses accounted for as high as 69%. High inventory has continued to suppress prices, but it has also provided downstream companies with a stable raw material guarantee. It is expected that in 2025, with the improvement of supply and demand relations, inventory pressure will gradually ease, but the destocking process may run throughout the year.


Industry competition pattern: increased concentration and integrated layout
China's silicone industry has entered a period of deep integration, and market concentration continues to increase. By the end of 2024, the total capacity CR5 (market share of the top five companies) of the domestic silicone industry has reached 60%, and CR8 is as high as 79%5. With an annual capacity of 865,000 tons, Hosun Silicon ranks first in the industry, accounting for 25% of the country's total capacity. Leading companies such as Dongyue Silicon Materials and Jiangxi Spark follow closely behind, and the combined capacity of the top three companies accounts for nearly 50%. This highly concentrated market structure gives leading companies significant advantages in pricing, technology research and development, and market expansion.


Integration of the industrial chain has become the core strategy for leading companies to compete. Taking Hosun Silicon as an example, it has laid out a complete industrial chain from industrial silicon to silicone monomers in Xinjiang, achieving self-sufficiency in raw materials and energy cost optimization. This vertical integration model enables companies to better control cost fluctuation risks and maintain relative competitive advantages during the industry's low period. According to industry analysis, the production costs of companies with an integrated layout can be 15-20% lower than those of companies that only engage in monomer production. In 2025, it is expected that more companies will extend upstream and downstream through mergers and acquisitions or new projects to enhance their risk resistance.


Technical barriers are reshaping the industry's competitive landscape. With the improvement of environmental protection requirements and the acceleration of product upgrades, enterprises with core technologies have gained greater development space. As of June 2024, China has 336,867 patents related to silicone technology, including 95,441 invention patents. Leading enterprises have increased their R&D investment in high-value-added products such as special monomers, high-end silicone oils and functional silanes, and gradually narrowed the technological gap with international giants such as Dow and Wacker. For example, companies such as Star Technology and Dongyue Silicon Materials have made breakthroughs in high-end fields such as electronic-grade silicone materials and medical silicones.


Structural adjustment of production capacity will become the main theme of the industry in 2025. Under the guidance of policies and market pressure, methylchlorosilane monomer production units with a construction scale of less than 400,000 tons/year and a single unit scale of less than 100,000 tons/year will gradually withdraw from the market. At the same time, large-scale, integrated and green devices that meet the requirements of the "14th Five-Year Plan" will gain more development space. Although this capacity replacement process may intensify market competition in the short term, it will be conducive to the healthy development of the industry and the improvement of international competitiveness in the long run.