In 2024, new silicone capacity in China starts to be released intensively. Most of the planned capacity for 2023 has been postponed to this year, resulting in a significant increase in new capacity this year. According to SMM, as of now, the total domestic DMC capacity is 6.42 million mt/year, up 19.11% YoY, with 880,000 mt/year of new capacity this year. Additionally, there are plans to add another 500,000 mt/year of DMC capacity soon, accelerating the supply growth.
Regarding existing capacity, the new capacity added this year, including technical upgrades and new constructions, is as follows: Shandong (100,000 mt/year), Zhejiang (180,000 mt/year), Jiangxi (200,000 mt/year), Hubei (200,000 mt/year), and Hebei (200,000 mt/year).
For the planned capacity this year, there is still 500,000 mt/year of DMC capacity in the final stages of construction and technical upgrades. It is expected that the new domestic DMC capacity will reach 1.38 million mt/year this year, with an accelerated growth rate compared to last year. Additionally, there are plans for another 2.9 million mt/year of DMC capacity in 2025. Although some of the new capacity plans may be delayed due to market conditions, the overall domestic supply growth rate will remain high in the next two years.
With the recent exit of foreign-funded enterprises from the DMC capacity market and the reduced overseas production due to market conditions, the global concentration of DMC production is rapidly shifting towards China. According to SMM, China's share of global silicone capacity is expected to increase to 83% this year and nearly 90% next year. China will dominate the low- and mid-end silicone products market, and domestic producers are continuing to expand and research downstream products, leading to a more diverse and technologically advanced range of silicone products in the future.
