In the silicone market in July 2025, the insufficient support from the demand side and the differences in mentality among upstream and downstream enterprises have become the core contradictions restricting the development of the industry. This situation is formed by the interweaving of multiple factors. It not only has the direct impact of short-term market fluctuations but also reflects the deep-seated structural contradictions in the industry.
Weak demand side: The dual engines of real estate and photovoltaic lack sufficient momentum
Although data from the National Bureau of Statistics shows that the sales area of newly built commercial housing across the country decreased by 3.5% year-on-year in the first half of 2025, with the decline narrowing by 15.5 percentage points compared to the same period last year, the real estate industry as a whole is still in a weak recovery stage. As the largest downstream consumer field of silicone, the demand for building sealants, structural adhesives, etc. has not shown substantial improvement. Silicone sealant enterprises generally adopt a "production based on sales" strategy, and the inventory turnover days have been extended to more than 45 days. The photovoltaic sector is also facing challenges. Polysilicon enterprises maintain a trend of production cuts, and the progress of distributed projects is slow, which has led to a slowdown in the growth rate of photovoltaic film demand. According to industry monitoring, the apparent consumption of DMC (dimethylcyclosiloxane) in China decreased by 2.3% month-on-month in July 2025, confirming the reality of weak terminal demand.
The divergence in mentality between upstream and downstream: Strategic adjustments in the game
There are obvious strategic differences between upstream individual factories and downstream processing enterprises. The DMC quotation for individual factories in Shandong region has slightly increased to 10,800 yuan per ton, while in other regions, it remains at a high level of 11,300 to 11,500 yuan per ton, attempting to relieve inventory pressure through the price lever. However, the purchasing strategies of downstream enterprises have become more cautious. The raw material inventory level of silicone sealant enterprises has dropped to a historical low, maintaining only a 15-20 day safety stock, and they have a clear resistance to high-priced sources. This divergence is particularly prominent in the pre-sale order scheduling data: the pre-sale order completion rate of individual factories reached 85% in July, but the number of new order signings decreased by 12% month-on-month, reflecting the lack of confidence of downstream customers in the future market.
Structural contradiction: Mismatch of production capacity and profit inversion
The deep-seated contradiction in the industry lies in the mismatch between capacity expansion and demand upgrading. From 2023 to 2025, the domestic new capacity of organosilicon monomers will exceed 2 million tons, but the proportion of high-end products is less than 30%, leading to a homogenized competition among ordinary DMC products. The gross profit margin of leading enterprises such as Dongyue Silicon Materials has dropped to 0.79%, and some small and medium-sized enterprises have been in a state of production suspension. Meanwhile, the technological upgrading of downstream enterprises is slow, and the situation where high-end electronic adhesives and medical-grade silicone oil rely on imports has not changed, further compressing the profit margins of the industry.
The breakthrough path: Technology-driven and demand reconstruction
Facing the deadlock, the industry is exploring two breakthrough paths: one is to enhance the added value of products through technological innovation. For instance, enterprises like Hengxing Technology have intensified their research and development efforts on special resins for photovoltaic films. Second, we will explore new application scenarios. The demand for silicone materials in fields such as new energy vehicles and 5G communications has grown at an average annual rate of over 15%. Under the national "dual carbon" strategy, the continuous expansion of photovoltaic installed capacity may become a turning point for the industry. However, in the short term, it is still necessary to be vigilant against the risk of price wars caused by overcapacity.
