(August 26, 2026) The domestic silicone processing market is showing continued recovery. Hydrogenated silicone oil, as a key intermediate in the production of addition-type silicone rubber, silicone-modified products, and waterproof coatings, is driven by demand from fields such as photovoltaic encapsulation, new energy batteries, AI computing liquid cooling systems, and high-end textiles. As a result, market activity continues to increase, and the industry is moving towards higher purity levels, smaller particle sizes, and customized specialty grades.

In terms of demand, traditional applications such as water-resistant treatments in textiles and cross-linking of silicone rubber remain important areas for hydrogenated silicone oil. However, the new energy and electronics sectors are becoming the main drivers of growth. The consumption of hydrogenated silicone oil used in photovoltaic module encapsulation adhesives and power battery sealing materials is steadily increasing. With the development of AI computing infrastructure, there is a growing demand for hydrogenated silicone oil with low impurities and specific properties. This leads to stricter requirements regarding product purity, metal ions, and molecular weight distribution. Market research shows that in 2026, overall demand for hydrogenated silicone oil in China will continue to grow steadily, with special grades containing high levels of hydrogen atoms or other hydrogen-containing components seeing significantly faster growth rates compared to standard grades.

On the supply side, leading domestic companies are continuously improving their production processes and developing specialized products. Recently, domestic companies have filed patents for low-viscosity, low-particle-size hydrogenated silicone oil. Through innovative catalytic processes, they are able to achieve narrow molecular weight distributions and low levels of small molecules, making these products suitable for applications in the electronics and personal care industries, where strict regulatory requirements apply. This helps to reduce the gap between domestic products and those from overseas manufacturers. Some integrated silicone projects plan to add ten-thousand-tonne capacity for hydrogenated silicone oil, further enhancing the domestic processing industry chain. However, there is still a shortage of high-quality customized grades, so competition in the industry is shifting from basic production capacity to the development of unique formulations and quality control capabilities.

Industry experts believe that fluctuations in the price of silicone raw materials, environmental regulations, and safety measures related to hazardous chemicals will continue to affect companies’ operations in the second half of the year. Downstream customers are also paying more attention to compliance certifications such as REACH and RoHS. In the future, growth in the hydrogenated silicone oil industry will come mainly from specialty modified products. Companies that can ensure stable performance across different batches and offer customized solutions will gain a competitive edge in the market. Exporting to foreign markets will also become an important growth area for domestic manufacturers.