I. The violent collision between tariff escalation and the current status of the industry
In April 2025, the US "reciprocal tariff" policy on China was officially implemented. Combined with the 10% tariff implemented at the beginning of the year, the comprehensive tariff rate of China's silicone products exported to the United States has reached 45%. This policy directly impacted the traditional export pattern of China's silicone industry-although primary-shaped polysiloxane (39100000) was included in the exemption list, deep-processing products such as silicone oil and silicone rubber still face high tariffs. Data shows that the proportion of China's silicone exports to the United States has dropped from 15% in 2018 to less than 2% in 2024, but this structural adjustment has not completely eliminated the chain reaction caused by tariffs.
On the production capacity side, China has become the world's largest silicone producer, with a production capacity of 3.45 million tons in 2024, accounting for more than 60% of the world's total production capacity. However, the industry's over-reliance on exports (546,000 tons of exports in 2024, accounting for 15.8% of total production) has made companies face severe challenges under the impact of tariffs. Take DMC (organic silicone intermediates) as an example. Its price quickly fell to 13,000 yuan/ton after the introduction of the tariff policy, and some companies even sold their inventory at a low price of 12,800 yuan/ton.
2. Dual variations of supply chain reconstruction and market differentiation
Tariff pressure forces Chinese silicone companies to accelerate the global layout of the supply chain. On the one hand, companies circumvent tariff barriers by setting up production bases in Southeast Asia, the Middle East and other places. For example, the 400,000-ton silicone project of Luxi Chemical was put into production, and the 100,000-ton siloxane project of Hesheng was launched, both of which reflect the trend of capacity shifting to cost depressions. On the other hand, the domestic supply chain is accelerating integration, and leading companies such as Dongyue Silicon Materials have built a "seller's market" advantage through technical patents, forming differentiated competitiveness in the field of high-end products.
Market differentiation is particularly significant on the end-demand side. The shrinking US market has prompted companies to turn their attention to emerging markets such as ASEAN and the Middle East. In 2024, China's exports of silicone to ASEAN increased by 22% year-on-year, with Vietnam and Thailand becoming the largest growth poles. At the same time, the "dual circulation" strategy of the domestic market has begun to show results. Companies such as Jiangxi Chenguang have effectively hedged international market risks by increasing the proportion of domestic sales to 35%.
3. The way out of the dilemma of technological upgrading and policy support
Tariff barriers have become a catalyst for technological innovation. Domestic companies are accelerating the breakthrough of technical bottlenecks in high-end silicone materials. For example, Zhejiang Tiangui's "20,000 tons of silicone oil and deep processing project" adopts a fully automatic continuous production line, and the product performance is benchmarked against EU environmental protection standards. Inner Mongolia Shenghe's "17,500 tons of silicone oil, silicone and silicone resin project" has achieved 90% production automation, and R&D investment accounts for 13%. These measures have promoted China's self-sufficiency rate of high-end silicone products from 38% in 2022 to 55% in 2024.
Policy support provides a solid backing for industry transformation. The Catalogue of Encouraged Industries in Western Regions (2025 Edition) includes silicone in key support areas, and the energy advantages and industrial policies in Xinjiang, Yunnan and other places have a superimposed effect. In addition, the government reduces corporate costs through export tax rebates, R&D subsidies and other means. For example, the export tax rebate rate for silicone deep-processing products will be increased to 13% in 2025.
IV. Rebalancing of the global competitive landscape and future prospects
The tariff policy has reshaped the competitive landscape of the global silicone industry chain. Multinational companies such as Dow Chemical of the United States and Shin-Etsu of Japan have increased their high-end product layout in China, trying to consolidate their market share through technological barriers. Chinese companies, on the other hand, rely on cost advantages and policy support to maintain their dominant position in the mid- and low-end markets. It is predicted that by 2030, the scale of China's silicone market will grow at a compound growth rate of 7.4%, becoming a global growth engine.
In the future, the industry needs to continue to exert efforts in three dimensions: first, deepen capacity cooperation with countries along the "Belt and Road" and build a diversified market network; second, strengthen basic research and break through "bottleneck" technologies such as electronic-grade silicon materials and biodegradable silicone rubber; third, promote green production, reduce carbon emissions through a circular economy model, and conform to the global carbon neutrality trend.