Prices and profits have been significantly restored, and the turning point of the industry cycle has emerged
As of March 24, the market benchmark price of silicone DMC reached 14,400 yuan/ton, up 5.11% from the beginning of last month, continuing the upward trend since the beginning of the year. Since the beginning of the year, the average price of DMC has increased by 11.5% from the beginning of the year, and the gross profit of some leading companies has turned positive for the first time (gross profit of 371.88 yuan/ton in the week of March 21).
The supply side has shrunk, the industry has jointly reduced production, and 1.82 million tons of production capacity has entered maintenance (accounting for about 53% of the total domestic production capacity). In addition, the capacity expansion cycle has ended (only the 100,000 tons/year project of Xingfa in Inner Mongolia is scheduled to be put into production in June), and the supply is tight. The demand side has picked up, the traditional peak season is approaching, the demand for construction and electronic appliances has steadily recovered, and the demand for emerging fields such as photovoltaics and new energy vehicles has grown rapidly, which has promoted inventory digestion.
The supply and demand pattern has improved profoundly, and emerging fields have become growth engines
The domestic DMC production capacity of silicone has surged from 1.515 million tons in 2019 to 3.44 million tons in 2024, but only 100,000 tons of new capacity will be added in 2025, and the supply pressure has been significantly alleviated. The industry's operating rate has rebounded from the low of 67.5% in February to 80.69%, and maintenance equipment has resumed production one after another, but overall production has been reduced.
In terms of demand, traditional and emerging dual-wheel drive. The demand of the construction industry (accounting for 25% of consumption) and electronic appliances (accounting for 23%) has benefited from the recovery of the real estate chain (second-hand housing transactions have rebounded, infrastructure investment has accelerated) and consumption upgrades. The photovoltaic industry is affected by the global new energy installation boom. Silicone materials are used for photovoltaic module packaging and bonding, and demand is expected to increase by more than 20% annually. The new energy vehicle industry has promoted the growth of silicone consumption in terms of battery sealing and lightweight components. In 2024, the output of new energy vehicles will be 11.71 million, corresponding to a demand for silicone of about 210,000 tons.
In terms of exports, China's exports of silicone intermediates will reach 546,000 tons in 2024, a year-on-year increase of 34.2%, with South Korea, India and the United States as the main markets.
Industry concentration has increased, and the advantages of leading enterprises have been consolidated
The production capacity of the top five domestic enterprises (Hexeng Silicon, Dongyue Silicon Materials, Xingfa Group, etc.) accounts for more than 62%, forming a "one super and many strong" pattern. Leading enterprises strengthen their competitiveness through technology upgrades (such as high-end silicone product research and development) and industrial chain integration (such as Hexeng Silicon's layout of the entire photovoltaic industry chain). Some companies have raised the ex-factory price of DMC by 200-500 yuan/ton in February, and have a strong willingness to support prices.
Future trends: high-end transformation and rebalancing of supply and demand
The iterative upgrades of photovoltaic and new energy vehicles have increased the demand for high-performance silicone materials, forcing the industry to upgrade its technology. The supply growth rate has slowed down significantly (only 3% in 2025), and the demand growth rate (expected to exceed 5%) is expected to support further recovery of prices and profits.
The current silicone industry is facing a turning point in the improvement of the supply and demand structure. The price and profit recovery trend is clear, and the demand in emerging fields has become the core growth driver.