(August 21, 2026) Since 2026, the domestic hydroxyl silicone oil market has shown a clear pattern of “stable growth in total volume, with differentiated structures”. According to the latest data from industry research institutions, the size of the domestic hydroxyl silicone oil market is expected to exceed 6.2 billion yuan in 2026, representing a 8.2% increase year-on-year. Among these products, high-activity and low-volatility high-end products have seen a growth rate of over 20%, significantly outperforming ordinary industrial-grade products. Structural shortages have become the core issue in the industry.

The opportunity for domestic substitution has opened up, and breakthroughs are occurring in the high-end market.

Due to fluctuations in the global supply chain, early in 2026, the delivery times and prices of imported hydroxyl silicone oil increased, creating a rare opportunity for domestic high-end products to replace imports. In rapidly growing downstream industries such as photovoltaic encapsulation, new energy vehicle electronics, and semiconductor packaging, customers are more willing to use high-quality domestic silicone oils. Compared to imported products, domestic hydroxyl silicone oil has shorter delivery times (7–15 days) and faster response to custom requirements, resulting in a clear cost advantage.

In terms of production capacity, the total domestic hydroxyl silicone oil production capacity in 2026 is expected to be around 315,000 tons. However, the newly added high-purity high-end production capacity is only 25,000 tons, indicating that supply in the high-end segment remains tight. Industry analysts say that as the certification periods for downstream customers shorten, domestic substitution is moving from the “test phase” to the “mass adoption phase”. A key technological milestone is the commissioning of a 50,000-ton continuous production line.

In the third quarter of 2026, a significant breakthrough was achieved in the field of organic silicon intermediates in China – a continuous production facility capable of producing 51,000 tons of low-hydroxy small molecule residual hydroxyl silicone oil was operated at full capacity for 72 hours. The hydroxyl content of this product can be precisely adjusted within the range of 1.2%–12%, and the total volatilization level is controlled to international standards, breaking the long-term dependence on imported raw materials for building sealants. At the same time, the implementation of the T/FSI series “Hydroxyl Silicone Oil” standard has set clear requirements for key indicators such as terminal hydroxyl content, acid value, and colority. This has forced companies to upgrade their testing equipment and process control capabilities, and the level of standardization in the industry continues to improve.

Three major downstream sectors drive long-term growth.

On the demand side, new energy vehicle electronics, photovoltaic module sealing, and semiconductor packaging are the three main areas that drive consumption of hydroxyl silicone oil:

New energy vehicles: Automotive electronic encapsulants have a strong demand for low-volatility, high-reliability hydroxyl silicone oil;

Photovoltaic industry: Low-volatility hydroxyl silicone oil used for module sealing continues to grow as the number of installations increases;

Semiconductor packaging: High-purity hydroxyl silicone oil is becoming increasingly used in electronic encapsulation and heat-conducting materials.

In the global market, the hydroxyl silicone oil emulsion market was valued at approximately 1.01 billion US dollars in 2025. It is expected to reach 1.05 billion US dollars in 2026, and will grow to 1.62 billion US dollars by 2034, with a compound annual growth rate of 5.3%. Asia-Pacific region benefits from its manufacturing cluster advantages and its market share continues to expand.

Looking ahead

Industry experts say that the hydroxyl silicone oil industry is at a critical stage of transitioning from “scale expansion” to “high-end breakthroughs”. As domestic high-end production capacity gradually increases and the downstream certification systems become more mature, it is expected that apparent consumption will reach 318,000 tons in 2026, representing a 11.2% increase year-on-year. The proportion of high-end products is expected to rise from 34.6% in 2025 to 39.2%, driving up the industry’s weighted average price. Companies with comprehensive quality control capabilities and customized synthesis processes will be able to take advantage of this industrial upgrade.