RTV Silicone Rubber Sector – High-end Vacuum & Excessive Low-end Expansion

By Tian Guopeng, CNCIC China Silicon Material Information Research Center

Domestic capacity expanded drastically and two major production bases formed

In the past ten years, the domestic market of room temperature vulcanizing (RTV) silicone rubber has grown rapidly. Foreign silicone players constructed production bases one after another in China. Meanwhile, domestic silicone producers have all expanded capacity. The average annual growth of silicone rubber capacity in China was as high as 26.3%, while output grew at 23.1%. As of the end of 2013, China hosted over 80 RTV silicone rubber producers, with a combined capacity of about 1.03 million t/a. Their total output in 2013 was 640 kt with an average operating rate of 62%. China’s larger RTV silicone rubber production units are mainly located in South China and East China, with few in other regions. Enterprises that can produce high-end RTV silicone rubber products include Dow Corning (Zhangjiagang) Silicone Co., Ltd., Hangzhou Zhijiang Silicone Co., Ltd., Guangzhou Xinzhan Silicone Co., Ltd. and Chengdu Guibao Science and Technology Co., Ltd., and these companies make higher quality products and more varieties than other domestic producers. Table 1 shows major RTV silicone rubber producers in China in 2013.
In recent years, with continuous technical innovation and market expansion, two large production bases of RTV silicone rubber have been formed in Zhejiang and Guangdong. The average operating rate of China’s RTV silicone rubber sector has been 64%. In the next few years, the capacity for RTV silicone rubber in China will continue to grow, as over ten new projects are reported to be under construction or in planning, let alone the many producers quietly planning to expand existing production units or construct new ones. With the release of new capacity, the present RTV silicone rubber supply gap is estimated to be around 5 kt with a surplus of low- and medium-grade products and a shortage of high-end products.   

Table 1   China’s major RTV silicone rubber producers in 2013 (kt/a)

Company    Location    Capacity
Zhaoqing Haohong New Material Co., Ltd.    South China    100
Guangzhou Xinzhan Silicone Co., Ltd.    South China    80
Dow Corning (Zhangjiagang) Silicone Co., Ltd.    East China    60
Guangzhou Antai Chemical Co., Ltd.    South China    50
Wacker Chemicals (Zhangjiagang) Co., Ltd.    East China    41
Guangdong Olivia Chemical Co., Ltd.    South China    40
Hangzhou Zhijiang Silicone Co., Ltd.    East China    30
Guangzhou Baiyun Chemical Industry Co., Ltd.    South China    30
Foshan Nanhai Jiamei Fine Chemical Co., Ltd.    South China    30
Chengdu Guibao Science and Technology Co., Ltd.    Southwest China    28


Application range is wide

The largest consumption of RTV silicone rubber is the construction sector, in which it can be used in building walls, sealing parts of buildings and processing energy-saving glass. Another large application field is the automotive sector in which RTV silicon rubber can be used to produce sealing parts of engine pans, gearboxes, vehicle axles, HID headlight circuit modules, etc., because of its excellent oil-resistance at high temperatures. In other sectors such as the electronic/electrical industry and the renewable energy sector, RTV silicone rubber is widely used in sealing packages, in adhesives, etc. In 2013, the total consumption of RTV silicone rubber in China was 650 kt, up 6.2% year-on-year.
(1) The construction sector. China’s construction sector consumed 369 kt of RTV silicone rubber, 56.8% of the total. Three major applications in the construction sector – building walls, making sealing materials for buildings and processing energy-saving glass – consumed 165 kt, 137 kt and 67 kt of RTV silicone rubber, respectively. It is worth mentioning that the manufacture of energy-saving double glazed windows has become the application with the fastest demand growth.
(2) Electric/electronic sector. China has become the largest producer of electronic products in the world. Its electronic component industry has grown at an average annual rate exceeding 30% since 1999. In 2013, China’s electric/electronic sector consumed 54 kt of RTV silicone rubber, 8.3% of the total.
(3) Automobiles. According to statistics of China Association of Automobile Manufacturers, in 2013, both the output and sales of automobiles in China exceeded 20 million vehicles, up 14.67% and 13.87% respectively. The consumption of automobile adhesives in China in 2013 was 180 kt, of which 127 kt was structural adhesives. With the development of lightweight automotive technology, the demand for structural adhesives will increase significantly. China’s automobile industry consumed 48 kt of RTV silicone rubber in (including vehicle repair market) in 2013, 7.4% of the total.
(4) Environmental protection at power plants. Currently, most coal-fired power plants in China use the wet desulphurization process to treat flue gas. In order to alleviate the erosion of the inner walls of stacks by flue gas, high-performance RTV silicone rubber is used to adhere a layer of light-weight corrosion-resistant materials (such as acid-resistant foam glass tiles) to prevent direct contact between flue gas and the inner walls of stacks. It is estimated that each stack in a power plant needs about 60 tons of RTV silicone rubber. In 2013, the consumption of RTV silicone rubber in China’s power plants was 45 kt, 6.9% of the total.
(5) Renewable energy. Currently, the fast-growing renewable energy market, especially for solar devices, has promoted the consumption of RTV silicone rubber, which can be used to seal photovoltaic components. Producing 1 MW of photovoltaic modules consumes about 1 ton of silicone sealing materials. It is estimated that the consumption of RTV silicon rubber in making such modules was about 29 kt in 2013 in China, 4.5% of the total.
(6) Other manufacturing industries. RTV silicone rubber is also used in the manufacture of many types of machinery and equipment, such as sealing contacting surfaces of engine parts, sealing of seams in the operator’s cab of an excavating machine, sealing between the elevator compartment and the reinforcing ribs, as well as some parts requiring high-performance sealing and oil-resistance properties. With the development of high-performance silicone adhesives, the traditional seam sealing methods used in many manufacturing industries have been gradually replaced by processes using silicone adhesives, significantly promoting the consumption of RTV silicone rubber. In 2013, the consumption of RTV silicone in these manufacturing industries was 105 kt, 16.1% of the total. See Figure 1 for details.

Prices fluctuated widely
in recent years

In 2012, the prices of RTV silicone rubber in China fell drastically due to factors such as extreme overcapacity in the silicone monomer sector, the sluggish economic situation outside China and weak demand. The decline continued in the first half of 2013. However, in July 2013, with the recovery of the global market, prices began to rebound, peaking in September at RMB18 700/t. Another downturn, in the first half of 2014, was just like the situation a year earlier. In July, the market began to recover again, and the prices of RTV silicone rubber began to increase gradually due to climbing raw material costs. See Figure 2 for details. It is forecast that the price of RTV silicone rubber will not change drastically in the remaining months of 2014.

Unwise, low-end competition intensified

In recent years, both the output and consumption of silicone rubber in China have increased year by year. However, most domestic enterprises can produce only low- and medium-grade products, and such products are in surplus, while high-end products consumed in China are supplied by foreign producers like Dow-Corning, Wacker and Shin-Etsu. Therefore, the healthy development of China’s silicone rubber industry has been restricted by imprudent, low-end competition among domestic producers. In the future, more and more low-end products and producers that are less competitive will be squeezed out of the market, and industrial concentration will increase significantly.