In July 2025, Dow Chemical, a global chemical giant, announced the closure of three major upstream assets in Europe, including the Barry plant in the UK. Among them, the Barry plant involves a capacity of 145,000 tons of DMC (core intermediate for silicone), accounting for 3% of the global total capacity and 13.7% of the overseas capacity. This move marks an accelerated contraction of overseas silicone production capacity, and as the world's largest producer, China is now at a crucial turning point for optimizing the supply and demand pattern.
The decline of overseas production capacity: An inevitable choice due to cost pressure and industrial transfer
The European silicone industry has long been confronted with structural challenges such as high energy costs (natural gas prices are 3.3 times that of the United States), carbon taxes, and strict environmental protection regulations. The predecessor of Dow's Barry plant in the UK can be traced back to the 1990s. It was once the largest silicone base in Europe. However, in recent years, due to cost disadvantages, its production capacity has been reduced from 200,000 tons to 145,000 tons, and it will eventually start the shutdown process in 2025. Data shows that since 2015, overseas silicone production capacity has dropped from 1.35 million tons to 1.06 million tons, with a cumulative withdrawal of 290,000 tons. Meanwhile, China's production capacity has expanded from 3.14 million tons to 3.44 million tons, accounting for 76% of the global total. The continuous contraction of overseas production capacity reflects that the trend of global industrial chains shifting to China is irreversible.
Domestic supply and demand reversal: The end of capacity expansion resonates with the explosion of demand
The Chinese silicone industry has entered the final stage of capacity expansion. There will be no new capacity released after 2024, while the demand side maintains a strong growth. From 2021 to 2024, the compound annual growth rate (CAGR) of industry demand reached 15.5%. The demand for high-performance silicone materials in emerging fields such as photovoltaic, new energy vehicles, and 5G has soared. Take photovoltaic as an example. A single GW of module encapsulation adhesive requires approximately 1,500 tons of DMC. With the global photovoltaic installed capacity exceeding 500GW, the annual demand increment in this field alone exceeds 750,000 tons. After the withdrawal of overseas production capacity, the export share of Chinese enterprises is expected to further increase from 545,700 tons in 2024, and their global market share may exceed 60%.
The competitive landscape of enterprises: Leading enterprises benefit from the advantages of the entire industrial chain and cost
Domestic leading enterprises such as Xin 'an Co., Ltd. and Hesheng Silicon Industry have achieved remarkable cost competitiveness through an integrated layout of "industrial silicon - organosilicon monomer - terminal products". Take Xin 'an Co., Ltd. as an example. Its DMC production capacity reaches 275,000 tons, and its overseas sales are expected to reach nearly 1 billion yuan in 2024. It has been deeply cooperating with leading customers in the overseas personal care, medical and health care and other industries. Hesheng Silicon Industry, with a production capacity of 900,000 tons, firmly holds the top position globally. Its "coal-electricity-silicon" integrated model reduces the cost of DMC per ton by 2,000 to 3,000 yuan compared to overseas markets. In addition, enterprises such as Dongyue Silicon Materials and Xingfa Group have further strengthened their profit resilience by increasing the proportion of deep-processed products.
