Market Recap: Steady Price Momentum Amid Supply Constraints
As of March 23, 2026, the global silicone market maintains a bullish tone, supported by sustained supply tightness and resilient downstream demand. Domestic key product DMC trades stably at 14,150 RMB/ton, with a cumulative gain of 3,000 RMB/ton since November 2025, while 107 glue holds above15,200 RMB/ton. International giants including Dow, Wacker and Evonik have fully implemented their latest price hikes (5%-20%), with European supply shrinking further following Dow’s planned shutdown of its 145,000-ton/year UK siloxane plant, cutting regional capacity by nearly 30%.
Downstream procurement remains rational and demand-focused, with construction and electronics sectors sustaining steady orders. A notable case: Xingfa Group reported a 12% month-on-month rise in orders for high-temperature vulcanized (HTV) silicone, driven by strong demand from home appliance and automotive sealing segments. Small and medium-sized manufacturers continue to pass costs via moderate price increases, avoiding aggressive hikes to retain client partnerships amid market uncertainty.
Policy Impact: Export Rebate Cancellation Reshapes Competitive Landscape
The upcoming April 1 cancellation of China’s export tax rebate for primary polysiloxane is triggering strategic shifts across the industry. The move eliminates the 13% rebate advantage, squeezing export margins by an estimated 3-5 percentage points for small to mid-sized exporters. Several Jiangsu/Zhejiang based firms have paused non-profitable overseas orders, shifting focus to high-margin domestic high-end markets instead.
Concurrently, strict 35% industry-wide emission cuts (March-May) have lowered operating rates at smaller facilities to 65%-70%, accelerating the phase-out of outdated capacity. Leading players like Hesheng Silicon Industry and Silicone Technology are leveraging this shift, expanding eco-friendly high-purity production lines to capture market share left by retreating small players. Industry projections show the top 5 domestic producers will control over 60% of the market by 2027, marking a historic consolidation wave.
High-Growth Segments: EV & Recycled Silicone Steal the Spotlight
New energy and circular economy themes dominate industry growth, with tangible corporate breakthroughs validating the trend. Guibao Technology has secured a long-term supply contract with CATL, delivering EV battery thermal management silicone at a monthly volume of 5,200 tons, with product performance meeting global automotive safety standards and operating temperature resistance of -40℃ to 200℃.
Recycled silicone is also gaining commercial traction: Elkem launched its first large-scale depolymerization recycling line in Norway, processing 20,000 tons of silicone waste annually into virgin-grade raw materials, cutting carbon emissions by 30% versus traditional production. Market data confirms the global recycled silicone market is on track to hit $2.3 billion by 2036 (CAGR 12.5%), as major brands adopt low-carbon supply chain targets.
Q2 2026 Outlook & Strategic Suggestions
Heading into the second quarter, silicone prices are expected to stay elevated, supported by limited new supply and peak construction demand. However, businesses must monitor three key risks: softened real estate-related demand, export headwinds, and raw material volatility.
Industry leaders recommend prioritizing high-value product development, optimizing inventory levels, and deepening partnerships with core downstream clients. Shin-Etsu Chemical sets a benchmark by reallocating 30% of its capacity to medical and aerospace-grade silicone, achieving stable profitability despite market fluctuations. For the broader sector, the path forward lies in innovation over volume — moving beyond commodity price wars to build sustainable, high-margin growth.
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