The DMC contract quotations of individual factories have entered a closed state, reflecting the intensification of short-term supply and demand competition in the silicone market. However, the long-term outlook is still driven by emerging demands and technological innovations, and has growth potential. The specific analysis is as follows
In the short term: The suspension of trading reflects the supply and demand game and the adjustment of market strategies
The closure of individual factories is usually related to a contraction in supply or expected changes in demand. For instance, in 2024, Shandong Dongyue's 300,000-ton production capacity was shut down due to a fire. Coupled with the concentrated maintenance of enterprises in Zhejiang, Xinjiang and other places, the supply dropped sharply. The enterprise stabilized the price by closing the inventory. Meanwhile, downstream industries (such as photovoltaic and electronics) replenish their inventories in a concentrated manner before the traditional peak season, and the demand is released in phases, further intensifying the tight supply and demand situation. In addition, enterprises may suspend trading to observe market reactions and adjust their quotation strategies to cope with cost fluctuations (such as changes in the price of metallic silicon) or exchange rate risks (such as the impact of the appreciation of the RMB on exports).
In the long term: Emerging demands and technological upgrades drive growth
The demand in emerging fields is booming: The demand for silicone materials in industries such as new energy vehicles, photovoltaics, 5G, and semiconductors is continuously growing. For instance, the amount of rubber used in new energy vehicles is seven times that of ordinary fuel vehicles, and the demand for high-performance silicone rubber and silicone resin in battery packaging, thermal management, sealing parts and other links has soared. In the photovoltaic industry, the requirements for the weather resistance and light transmittance of silicone materials in encapsulation films and backsheet materials have increased, driving product upgrades.
Technological innovation breaks through bottlenecks: The industry enhances product performance and stability by developing new catalysts and optimizing production processes. For instance, molecular design techniques can specifically enhance the chemical resistance, mechanical properties and biocompatibility of materials. Intelligent production processes (such as AI-driven molecular design platforms and digital twin technology) enhance production efficiency and reduce energy consumption.
Policy and market environment support: The national "dual carbon" strategy, manufacturing upgrading and other policies provide development opportunities for the silicone industry. Meanwhile, global silicone production capacity is shifting to China. Domestic enterprises are enhancing the added value of their export products through technological upgrades, gradually transforming from exporting primary raw materials to exporting deep-processed products.
