(July 10, 2026) Leading domestic silicone companies have collectively completed technical upgrades and acceptance for continuous production lines of electronic-grade and low-cyclic hydroxyl silicone oil. Relying on two core new processes—molecular distillation closed-loop purification and precise hydroxyl controllable polymerization—the key indicators of high-end domestic hydroxyl silicone oil have fully aligned with top international brands. Coupled with capacity contractions from overseas silicone giants and sustained growth in downstream demand for new energy and electronics, the industry's domestic substitution process is entering a phase of accelerated growth.
Hydroxyl silicone oil, as an intermediate with hydroxyl-terminated organosilicon, is a core raw material for room-temperature vulcanized silicone rubber, electronic potting adhesives, powder surface treatment, and high-end textile anti-stick coatings. The core of product performance depends on three major indicators: the stability of the hydroxyl terminal content, cyclosiloxane (D4/D5/D6) residues, and metal ion impurities. For a long time, domestic supply of general-purpose hydroxy silicone oil has been sufficient, but high value-added fields such as medical, semiconductors, and new energy electronics have long relied on imports, with pain points focused on large batch hydroxyl fluctuation, high ring residues, and insufficient metal ion control.
Since the second quarter of this year, companies such as Shandong Dongyue, Zhejiang Xin'an, and Bluestar Silicone have successively completed the commissioning of 10,000-ton intelligent production lines for special hydroxy silicone oil, adopting a brand-new continuous hydrolysis equilibrium process across the entire line, replacing traditional batch reaction units. According to company testing data, the new process can control hydroxyl error within ±3 mgKOH/g. Through multi-stage molecular distillation and volatilization technology, the total ring residue in the product stabilizes below 50 ppm, and the total heavy metal ion content is below 1 ppm, meeting the 2027 cosmetics D4 restriction and the latest EU REACH SVHC control standards. It can be directly applied to high-threshold scenarios such as medical aesthetic silicone, Mini-LED packaging, and power battery sealants.
Industry research data shows that in 2026, the domestic hydroxysilicone oil market size is expected to exceed 6.2 billion yuan, a year-on-year increase of 8.2%; Among them, high-activity, low-volatility high-end products grew by over 20%, significantly outperforming ordinary industrial-grade products. The core downstream drivers come from three major tracks: first, new energy vehicle electronics, where automotive silicone gel supports hydroxyl silicone oil with a compound annual growth rate of 22.4%; Second, demand for photovoltaic and power insulation and sealing materials is steadily rising; Third, the procurement volume of high-purity small-molecule hydroxysilicone oil for high-purity small molecule hydroxysilicone oils for high-end release paper and medical lubricant coatings continues to expand.
Supply-side landscape is being reshaped simultaneously: In overseas markets, Dow, Wacker, and Shin-Etsu have continuously raised prices of silicone products since Q2 2026. Coupled with production cuts and maintenance at European factories and rising energy costs, import hydroxyasilicon oil lead times have extended by 30%-60 days, forcing domestic electronics and new materials companies to switch to domestic supply chains. Customs data shows that by 2025, the overall import dependence of hydroxy silicone oil has dropped to 8.4%, while imports of high-purity electronic grade products will decrease by 23.4% year-on-year, showing significant results in domestic substitution.
In terms of cost and price, as of early July, mainstream prices in the domestic general-purpose hydroxy silicone oil market remained stable, and specialty low-ring electronic-grade products maintained high gross margins thanks to technical barriers. Industry association analysts stated that as the capacity of several newly built special silicone oil units continues to ramp up in the second half of the year, the self-sufficiency rate of high-purity hydroxy silicone oil will further improve, and in the long run, it is expected to break the pricing dominance of overseas brands in the high-end market.
On the R&D side, multiple breakthroughs are also underway. In 2026, several domestic silicon material companies will publicly disclose patents for modified hydroxy silicone oil. Phenolic hydroxyl modification, single-ended active hydroxy silicone oil, and specialized modified hydroxy silicone oil for marine anti-fouling coatings have entered pilot testing stages, expanding new application scenarios for anti-corrosion, composite materials, and microfluidic chips, opening up long-term growth potential for the industry.
Industry experts point out that the hydroxy silicone oil sector has moved beyond the simple expansion phase and entered a cycle of structural upgrades characterized by green processes, high-purity products, and refined applications. In the next two years, leading companies with continuous low-ring production lines, clean workshops, and full compliance testing capabilities will continue to increase their market share, with the industry's CR5 concentration expected to exceed 68%; At the same time, downstream demand for new energy, medical, and semiconductors is clearly expected to grow in the long term. As a core intermediate for organosilicon, hydroxy-based silicone oil still has stable growth potential.
Industry Brief Commentary
Tightening policies and environmental controls, fluctuations in overseas supply chains, and downstream high-end manufacturing upgrades are resonating together, accelerating technological iteration in the hydroxysilicon oil industry. Domestic companies are addressing shortcomings in high-purity products through process innovation, and domestic substitution is shifting from "quantitative substitution" to "qualitative catch-up." In the future, functional hydroxy silicone oils with green, low-carbon, low-VOC, and narrow molecular weight distribution advantages will become the core competitive track in the market.
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