(July 20, 2026) The domestic silicone specialty materials market continues to grow. Epoxy silicone oil, which has both epoxy reactivity and siloxane weather resistance and insulation properties, is driven by the four major downstream incremental tracks of new energy vehicles, Mini LED packaging, photovoltaic protective coatings, and high-end textile auxiliaries. The industry prosperity continues to rise. Domestic high-end brands gradually break the long-term monopoly of overseas brands, and the import substitution process is accelerated.
Epoxy silicone oil is the core raw material for reactive silicone modification. The molecular chain is equipped with both epoxy active groups and flexible silicone segments. It can be covalently grafted with epoxy resin, polyurethane, and acrylic resin. It solves the brittleness of traditional resins, temperature differences, weak interface adhesion, and long-term yellowing at the molecular level. It is an indispensable functional additive and modified resin intermediate for electronics, new energy, and high-end coatings.
The supply and demand pattern of the industry is optimized, and the trend of leading concentration is highlighted.
According to the latest industry survey data in July 2026, the domestic epoxy silicone oil market is expected to reach 1.99 billion yuan this year, a year-on-year growth of 6.4%; among which, high-end electronic grade and photovoltaic weather-resistant epoxy silicone oil have a growth rate of over 10%, significantly higher than ordinary textile grade products.
On the supply side, due to the dual impact of the industry's coordinated production cuts from June to August and the contraction of production capacity of major overseas manufacturers in Europe, the market's disorderly and low-price competition has been alleviated. The combined output of the four leading domestic enterprises, Blue Star Group, Xin'an Chemical, Hongbai New Materials, and Chenguang New Materials, accounts for nearly 69% of the national total, and the Matthew Effect in the industry continues to strengthen. Through flexible technological transformation of production lines and continuous synthesis process upgrades, leading companies have reduced energy consumption per ton of products by 5.3%, effectively hedging the rising cost pressure of epichlorohydrin and D4 silicone raw materials.
Import data shows that the import volume of epoxy silicone oil will fall by 5.7% year-on-year in 2025. The localization rate of ultra-high purity epoxy silicone oil (metal impurities ≤50 ppb) for semiconductor packaging has increased significantly. Domestic products have been supplied to domestic leading packaging companies in batches, gradually replacing overseas high-end products from Shin-Etsu and Dow Corning, and overseas brand premiums continue to narrow.
The downstream sectors are increasing their volume, with new energy and semiconductors becoming the core growth engines.
1.New energy vehicle power battery packaging
The amount of epoxy silicone oil used in new energy vehicle bicycles will increase from 0.86kg in 2025 to 1.21kg in 2026. It is used for battery pack potting glue, cell flame retardant coating, and wiring harness insulation resin modification. The epoxy encapsulant modified with epoxy silicone oil has the advantages of UL94 V-0 flame retardancy, resistance to high and low temperature alternating, and low internal stress cracking, and can extend the cycle life of power batteries by 20%. Domestic leading battery companies have fully switched to domestic modification systems, and monthly purchases have steadily increased.
2.Mini/Micro LED, semiconductor advanced packaging
High refractive index and low stress epoxy silicone oil is a key toughening component of LED encapsulants. In 2025, the consumption of epoxy silicone oil in the electronic field will be 18,900 tons, of which shipments of high-end models dedicated to Mini LEDs will increase by more than 25% year-on-year. The product can match the thermal expansion coefficient of the silicon substrate of the chip, avoid delamination and yellowing problems caused by long-term use of the screen, and cover the needs of the entire industry chain of consumer electronics and vehicle-mounted displays.
3.Photovoltaic outdoor weather-resistant protective coating
The epoxy silicone oil-modified UV coating and water-based photovoltaic backsheet coating passed the 3,000-hour UV aging test, with minimal color difference and outstanding salt spray and frost resistance. In 2026, the continued expansion of photovoltaic installed capacity will drive the steady release of demand for coatings, making it the second largest application sector for epoxy silicone oil. The annual consumption in the coatings field is expected to exceed 46,000 tons.
4.Green textile auxiliaries upgrade
Traditional amino silicone oil is easy to yellow and has poor hydrophilicity. Polyether modified epoxy silicone oil is used as a new soft finishing agent raw material to solve the pain points of fabric sticking to rollers and being airtight. Recently, Shanghai Fluoropolymer Chemical has disclosed a patent for a new type of epoxy silicone oil fabric finishing agent. The formula is based on terminal epoxy polyether silicone oil and is adapted to the low VOC production standards of green printing and dyeing. The demand for substitution in downstream textile factories continues to increase.
Technological innovation accelerated, and new high-end water-based and phenyl products were industrialized
Since July, many companies have announced breakthroughs in epoxy silicone oil technology: phenyl-modified epoxy silicone oil has been mass-produced, with the temperature range widened to - 60°C to 250°C, making it suitable for special sealing scenarios for aerospace and deep-sea equipment; water-based epoxy silicone oil has completed large-scale production, and the product VOC is close to zero, which meets the environmental protection control requirements of the coating and textile industries. Light-curing epoxy silicone oil can shorten the curing process by 50% and significantly improve production efficiency.
The research and development direction in the industry focuses on the two major routes of nano POSS composite modification and bio-based epoxy silicone oil, with the goal of further increasing the tensile strength of materials, reducing the proportion of petroleum-based raw materials, and adapting to the policy direction of future low-carbon material development.
Industry Outlook
Institutional analysis points out that the epoxy silicone oil industry will maintain high prosperity from 2026 to 2027: On the one hand, overseas Dow and Wacker are shrinking European silicone production capacity, global market share continues to shift domestically, and export orders are expected to increase; on the other hand, the domestic new energy, AI liquid cooling, flexible electronics, and photovoltaic industries have medium and long-term expansion logic unchanged, and high-end special epoxy silicone oil will continue to rise in volume and price.
In the short term, the industry's start-up will remain within a reasonable range in the third quarter, raw material costs have stabilized, and the gross profit margins of high-end products of leading companies are expected to be restored; in the medium and long term, companies with high-purity synthesis, customized brand R&D capabilities, and supporting downstream solutions will continue to benefit from import substitution dividends, and the epoxy silicone oil industry has officially entered a new development cycle of high-end, green, and localization.
