In 2025, the market for silicone raw materials is experiencing an unprecedented cold winter. The price of DMC has dropped from 13,000 yuan per ton at the beginning of the year to the range of 10,500 to 11,000 yuan per ton in late August, a decline of over 80% compared to the historical peak in 2021. The industry as a whole has fallen into a predicament of cost inversion. Behind this price storm lies the superimposition of triple pressures: imbalance between supply and demand, cost collapse and trade barriers.
Overcapacity and weak demand form a fatal scissors gap
In 2024, China's capacity for silicone intermediates soared by 24.2% year-on-year, while the growth rate of demand was only 18.4%, and the gap between supply and demand continued to widen. In the first half of 2025, the output of DMC increased by 27.4% year-on-year. However, the demand for traditional building adhesives shrank by 8% due to the downturn in the real estate market. Although the new energy sector maintained a growth rate of 15%, it was still difficult to absorb the excess capacity. What is even more serious is that the United States has imposed a 104% tariff on Chinese silicone products, directly impacting the Sino-US market with an annual trade volume of 2.28 billion US dollars. This has led to the inventory turnover days of domestic enterprises exceeding 45 days, forcing them to trade prices for volume.
Cost collapse has exacerbated industry losses
The price of metallic silicon at the raw material end has plummeted by 32.5% compared to 2024 to 10,800 yuan per ton, pushing the DMC cost line down to 9,800 yuan per ton. However, the market price has fallen below the cash cost of most enterprises. The net profits of leading enterprises such as Hesheng Silicon Industry and Dongyue Silicon Materials have been halved year-on-year, and Sanyou Chemical has even seen a loss increase of 124.4%. In mid-June, a single factory in Shandong Province, in an attempt to relieve its financial pressure, slashed the DMC quote to 10,200 yuan per ton, triggering a panic sell-off in the industry.
The key to breaking the deadlock: Dual drive of high-end development and globalization
Facing the darkest hour, leading enterprises are breaking through through three major paths:
Technological upgrade: Enterprises such as Luxi Chemical are accelerating their layout in high-end fields like photovoltaic film and new energy vehicle sealing parts. The gross profit margin of these products is 15 to 20 percentage points higher than that of traditional building materials adhesives.
Supply chain collaboration: Xingfa Group has reached a "volume-price linkage" agreement with leading customers. Monthly purchases exceeding 500 tons can enjoy a 2% to 3% discount, locking in long-term orders.
Internationalization layout: Chenguang New Materials has built a rubber compound production base in Southeast Asia, taking advantage of the local low tariffs to avoid trade barriers. The proportion of overseas revenue has increased to 35%.
Historical experience shows that the bottom of each cycle in the silicone industry lasts for an average of 28 to 36 months. The current industry operating rate has dropped below 75%. With the gradual elimination of backward production capacity after 2026 and the release of demand in emerging scenarios such as ultra-high voltage power grids and 5G equipment, the market is expected to witness a structural recovery. As the chairman of Hesheng Silicon Industry said, "The enterprises that survive the cold winter will dominate the next golden decade."
