China Cancels Export Tax Rebates for Condensation Silicone Primary Polymers, Accelerating Industry Upgrade

China’s cancellation of 13% export tax rebates for primary condensation silicone polymers (effective April 1, 2026) has forced manufacturers to shift focus from low-margin commodities to high-value specialty condensation silicones. Since April 1, 2026, China has eliminated the 13% value-added tax export rebate for primary condensation silicone raw materials (e.g., basic hydroxyl silicone oil, general-purpose RTV sealants). The policy aims to curb overcapacity and low-price competition in the global silicone market. In response, Chinese condensation silicone producers have cut low-end production by 35% and redirected R&D and capacity toward high-margin specialty products: low-VOC neutral-cure sealants, thermal-conductive potting compounds, and high-hardness mold-making silicones. This restructuring has lifted the industry’s average gross margin from 18% to 27% in H1 2026. Exports of high-value condensation silicone products (e.g., electronic-grade potting glue) increased by 42% YoY in Q2 2026, offsetting declines in commodity silicone exports.