In 2025, China's silicone industry will continue to struggle in the predicament of "high output and low output", with market prices remaining at a long-term low level and the profit margins of enterprises being severely compressed. However, with the structural adjustment on the demand side and the optimization of production capacity on the supply side, the industry is gradually showing signs of emerging from the quagmire of low prices.
Demand side: New energy and emerging fields have become the key to breaking the deadlock
Although the demand in the traditional construction sector still accounts for over 30%, its growth momentum is insufficient due to the sluggish real estate market. However, the explosive growth in the new energy sector has provided a new growth pole for organosilicon. By 2025, the newly installed capacity of photovoltaic power will exceed 400GW, driving the demand for photovoltaic module encapsulation adhesives to increase by more than 20% annually. The sales of new energy vehicles have exceeded 20 million units, driving a sharp increase in the demand for thermal conductive silicone and battery packaging materials. In addition, the demand proportion in emerging fields such as 5G base station heat dissipation materials and semiconductor packaging adhesives has risen to 15%, becoming a new growth engine for the industry.
On the supply side, capacity clearance and structural optimization proceed in parallel
The problem of overcapacity in the industry is prominent, but leading enterprises have achieved "survival of the fittest" through technological transformation and capacity replacement. By 2025, Xinjiang, Gansu and other northwest regions will become concentrated areas of low-cost production capacity by taking advantage of their coal and power integration, while the operating rates of high-cost production areas such as Yunnan and Sichuan will remain at a low level. Leading enterprises such as Hesheng Silicon Industry have controlled their production costs below 80% of the industry average through an integrated layout of "industrial silicon - organosilicon monomer - terminal products", thus forming a significant competitive advantage. Meanwhile, environmental protection policies have forced the exit of backward production capacity. Although the industry's operating rate dropped to 72% in the first half of 2025, the energy consumption per unit of product decreased by 12% compared to 2024, and the quality of supply has significantly improved.
Future Outlook: Driven by both high-end and green development
The industry is transforming from "scale expansion" to "value creation". The proportion of functional materials (such as thermal grease and optical-grade silicone) is expected to increase from 18% in 2025 to 35% in 2030, becoming the core of profit growth. Meanwhile, green manufacturing technologies are accelerating their popularization. By 2025, the comprehensive utilization rate of by-products in the industry is expected to reach 92%, an increase of 22 percentage points compared to 2020, promoting a 15% reduction in carbon emissions per unit of product.
Conclusion: The silicone industry has passed through the most challenging stage of capacity clearance. The explosive growth of new energy and emerging fields on the demand side, along with the structural optimization led by leading enterprises on the supply side, have jointly driven the industry into a new cycle of "stable volume and rising prices". Although the pressure of overcapacity in the mid-to-low-end market still exists, the transformation towards high-end and green development will help the industry get out of the quagmire of low prices and move towards a new stage of high-quality development.
