Recently, the silicone industry has once again become the focus of market attention. From rapid expansion of production capacity to constant changes in market demand, this industry is undergoing unprecedented transformation.
According to the latest data, the production capacity growth rate of organic silicon monomers and gas-phase white carbon black reached a new five-year high in 2024. Among them, the annual production capacity of organosilicon monomers is expected to reach 7.06 million tons, with a year-on-year increase of 24.08%. This growth rate not only far exceeds the average level of the past few years, but also reflects the sustained increase in market demand for organic silicon materials. In the past five years, due to the rise in product prices and the attraction of high profits, a large amount of market investment has poured into the silicone industry, coupled with the growth of downstream demand and the extension of integration of leading enterprises, resulting in a continuous stream of new single building plans. The successive production of these projects has led to an annual increase in individual production capacity.
However, while the production capacity is rapidly expanding, the supply growth rate gradually exceeds the demand growth rate, leading to the gradual entry of organic silicon monomers into the stage of overcapacity. Taking organic silicon DMC as an example, the domestic production is expected to increase by 6500 tons in January 2025, which will significantly increase supply pressure and pose a risk of price decline. While facing inventory pressure, individual enterprises also need to cope with strong willingness to accept orders and reduce inventory before the Spring Festival, which may further intensify market competition and lead to bidding for shipments.
Despite facing the challenge of overcapacity, the silicone industry is not without highlights. In 2024, the export volume of primary shaped polydimethylsiloxane will return to the growth track. As of October, the cumulative export volume has reached 453600 tons, and the year-on-year growth rate is expected to reach about 35%. This growth is mainly due to the continuous transfer of global production capacity of organic silicon primary products to China, as well as the promotion of global economic recovery and stable foreign trade policies. The growth of export volume has become an important tool for repairing the supply-demand relationship within the year, and it is also one of the main reasons for the slowdown in price fluctuations of products mainly based on DMC.
In addition, the market for gas-phase white carbon black is also showing a positive development trend. In 2024, the production capacity of gas-phase white carbon black in China is expected to reach 213.30 thousand tons, with a year-on-year increase of 12.68%. With the continuous development of downstream industries and the increasing application areas, the market demand for gas-phase white carbon black is expanding year by year. At the same time, influenced by the rapid development of the organic silicon and polycrystalline silicon industries, the production of by-products has increased, and related enterprises have expanded downstream to develop more gas-phase white carbon black facilities. These factors have collectively driven the prosperity of the gas-phase white carbon black market.
In the next five years, new projects in the upstream and downstream of the organic silicon industry chain will continue to release production capacity, and the capacity expansion speed of downstream products may gradually catch up with upstream. This will help organic silicon monomers gradually overcome the supply-demand imbalance and improve their profitability. However, market competition will also become more intense, and low profits may become normalized. Therefore, enterprises need to continuously strengthen technological innovation and product research and development, improve product added value and market competitiveness, in order to cope with future market challenges.
Meanwhile, with the increasing global awareness of environmental protection and the deepening of sustainable development concepts, the silicone industry will also face stricter environmental requirements and regulatory policies. Enterprises need to actively respond to these challenges, strengthen environmental investment and management, and promote green production and sustainable development.
Overall, the silicone industry is undergoing rapid transformation. Enterprises need to closely monitor market dynamics and industry trends, flexibly adjust their business strategies and product structures to cope with constantly changing market demands and environmental challenges. At the same time, the government and all sectors of society should also give more attention and support to the organic silicon industry to promote its healthy and sustainable development.