How does China's DMC capacity concentration affect downstream buyers' procurement strategy?

How does China's DMC capacity concentration affect downstream buyers' procurement strategy?
China is the world's largest producer and consumer of silicone monomers, holding about 51.3% of global capacity. DMC production is highly concentrated—around 10 major domestic players dominate, including Hoshine Silicon, Jiangxi Xinghuo, and Dongyue. This oligopolistic structure gives upstream producers strong bargaining power, as seen in 2021 when DMC prices swung from 22,000 yuan/ton to 63,000 yuan/ton within nine months. Downstream processors, such as silicone rubber and oil manufacturers, face margin pressure during supply tightness. The industry's high technical barriers and capital intensity limit new entrants, while environmental policies are phasing out small, inefficient capacity, further consolidating market share among leaders. For buyers, this means procurement must account for potential supply disruptions and price volatility driven by upstream production decisions.