Capacity and Market Structure: China Dominates the Global Supply Chain
China's silicone fluid industry has established a world-leading production capacity, with output reaching 620,000 tons in 2023, capacity exceeding 1.07 million tons, and apparent consumption reaching 520,000 tons, securing a core position in the global market. Leading companies such as Hosun Silicon, through a comprehensive industry chain layout, achieve integrated production from metallic silicon to high-end silicone fluids. Their products cover over 20 sectors, including industrial lubrication, cosmetics, and electronic packaging. In the first quarter of 2024, Hosun Silicon's revenue reached 5.415 billion yuan, confirming the trend of increasing market concentration.
Regional distribution shows a trend of "densifying in the east and expanding in the west": The Yangtze River Delta, relying on its electronics industry cluster, accounts for 43.2% of production capacity, with Jiangsu and Zhejiang provinces accounting for a combined capacity of 390,000 tons. Northwest China, leveraging its low electricity prices, is accelerating expansion. Companies such as Xinjiang Daquan and East Hope are building new 150,000 tons/year of production capacity, which will be fully operational in 2025. This will drive the industry's capacity utilization rate from 78.4% in 2020 to 87.6% in 2023.

Technological Breakthrough: From Basic Materials to Functional Upgrades
Industry technology iteration is showing three major directions:
Green Manufacturing Process: Yunnan Energy Investment Silicon Materials has achieved large-scale mass production of its low-cyclic vinyl silicone fluid. Through fully automated process control, its volatile organic compound (VOC) content has been reduced to below EU REACH regulatory standards. Its annual production capacity has reached 5,000 tons, filling a gap in the high-end electronic packaging material market.
Heat Resistance Breakthrough: Shandong Dongyue Chemical's 350°C-resistant silicone fluid has passed BYD's battery pack sealing test. Its backbone modification technology, using phenyl-substituted methyl groups, raises its thermal decomposition temperature to over 400°C, addressing the challenge of material failure under extreme operating conditions in the new energy sector.
Circular Economy: Zhejiang Xin'an Chemical has built the industry's first 10,000-ton siloxane recovery unit. Using catalytic cracking technology, it has increased byproduct recovery to 92%, reducing the cost per ton by 2,000 yuan, and driving the comprehensive raw material utilization rate to over 92%.

Application Areas: Driven by New Energy and High-end Manufacturing
The demand structure is undergoing a fundamental shift: In 2023, the new energy sector will account for 38.7% of consumption, with demand for silicone fluids used in photovoltaic module encapsulation increasing by 47.2% year-on-year, and demand for thermal management materials for new energy vehicles increasing by 36.5%. Typical application cases include:
Power battery modules: Low-viscosity silicone fluids, used as thermal interface materials, maintain stable thermal conductivity within a temperature range of -40°C to 200°C, ensuring thermal balance in the battery cells.
Photovoltaic inverters: Modified silicone fluids form self-healing coatings through Si-H bond addition reactions, extending equipment life to over 25 years.
Biomedical materials: Silicone rubber membranes formed by cross-linking hydrogenated silicone fluids have an oxygen permeability of 1200 barrer and are widely used in high-end applications such as artificial corneas and wound dressings. Challenges and Trends: Technological Barriers and Global Competition

The industry faces two core challenges:
Raw material price fluctuations: By 2024, the price fluctuation range of silicon metal will widen to ±15%, forcing companies to transition to a self-sufficient model. For example, Hosun Silicon Industry has achieved cost control by building a 400,000-ton/year silicon metal production capacity.
Stricter environmental regulations: The EU REACH regulation tightens the limit on octamethylcyclotetrasiloxane (D4) in silicone fluids to 0.1%, driving the industry to upgrade to low-ring and solvent-free processes.
Over the next five years, the industry will demonstrate a "high-end + globalization" development trend: By 2030, China's silicone fluid market is projected to reach 12.64 billion yuan, with photovoltaic-grade dedicated production capacity increasing from 19% to 34%, and exports expected to exceed 25%. Leading companies are building barriers through technology patent pools, and the industry's CR5 concentration is expected to increase from 51.3% in 2023 to 68% in 2030, creating a competitive landscape where the strong will always be strong.