Standing at a new starting point in the opening year of the 15th Five Year Plan, China's organic silicon industry is undergoing a crucial transition from "scale expansion" to "quality and efficiency". At the beginning of 2026, the industry showed a positive trend of continuous improvement in supply and demand relationships and steady recovery in prosperity, due to the interweaving of multiple factors such as self regulatory contraction on the supply side, structural upgrading on the demand side, and deep reshuffling of the industrial pattern.
Supply side contraction and normalization of self-discipline mechanism, industry bids farewell to disorderly competition
In recent years, the organic silicon industry has long faced the pressure of overcapacity. According to the latest assessment released by the China Petroleum and Chemical Industry Federation, polydimethylsiloxane has been included in the list of high-risk excess products, which has forced the industry to accelerate the clearance of outdated production capacity. Data shows that by 2025, the national production capacity of organic silicon monomers will remain at around 7 million tons. If long-term shutdown devices are excluded, the actual effective production capacity will be about 6.75 million tons, and there will be no new capacity released throughout the year, indicating that the industry's capacity expansion cycle has come to an end.
Against the backdrop of rigid supply constraints, industry self-regulation mechanisms are shifting from slogan style appeals to substantive implementation. Looking back at the end of 2025, the actual controller meeting of individual enterprises established a mechanism for emission reduction and price coordination. This measure was effectively implemented during the Spring Festival of 2026, and the overall operating rate of the industry remained at a low level of around 50%. This proactive 'emission reduction action' has successfully alleviated inventory pressure and laid a solid foundation for a 'good start' in the post holiday market. Looking ahead to the future, as the industry's self regulatory mechanism transitions to normalization, simple price games will gradually be replaced by rational production regulation, and the industry's development will become more mature.
Deep reshuffle of industrial pattern, taking new steps towards globalization layout
In February 2026, the industry will usher in heavy consolidation news. China Blue Star (Group) Co., Ltd. announced that it will fully acquire the core assets of Elkem's organic silicon business through share redemption. This transaction means that Blue Star Company will no longer hold shares in Eken, but will fully integrate its core organic silicon assets under its umbrella. This strategic measure not only optimizes the property rights structure of the global silicone industry, but also helps domestic leading enterprises integrate high-quality global resources, improve the technical barriers and operational efficiency of the entire industry chain, and enhance their discourse power in the international market.
Policy guidance and demand upgrading, dual wheel drive structural transition
At the policy level, the adjustment of the national export tax rebate policy has become an external driving force for industrial upgrading. Starting from April 1, 2026, export tax rebates for primary form polydimethylsiloxane will be cancelled. The market generally believes that this will force companies to reduce their dependence on primary products and accelerate their transformation towards refinement and high-end products, which is a concrete continuation of the industry's "anti internal competition" policy on the export side.
At the same time, the structural expansion on the demand side has provided new growth poles for the industry. As an "industrial vitamin", the application scenarios of organosilicon are experiencing explosive growth. The rise of emerging fields such as photovoltaic adhesives, adhesives for new energy vehicles, thermal conductive materials for ultra-high voltage and AI computing servers, and even humanoid robot electronic skins has greatly expanded the boundaries of the industry.
Market outlook: The logic of supply and demand recovery and rising prosperity is established
Under the dual support of limited capacity expansion and upgraded downstream demand, the market holds an optimistic attitude towards the future. The mainstream price of DMC stabilizes before the holiday, and there is room for upward market expectations after the holiday. This is not only due to the contraction of the supply side, but also stems from the release of downstream replenishment demand.
In summary, the Organic Silicon High Quality Development Conference to be held in Zhejiang on February 28, 2026, as the first meeting of the Chinese New Year of the Horse, will set the tone for the industry's development throughout the year. Under the joint efforts of optimizing the supply and demand pattern, deepening industry self-discipline, integrating leading enterprises, and releasing policy dividends, China's organic silicon industry is emerging from the shadow of overcapacity and accelerating towards a new cycle of high-quality development.