On November 10, 2025, Hesheng Silicon Industry announced that its second largest shareholder, Fidelity Industrial, plans to liquidate and reduce its holdings by 27.07 million shares (2.29% of the total share capital) within three months, with a cash out amount of 1.584 billion yuan calculated based on the closing price of the day. The recent reduction in holdings has raised concerns in the market about the profitability of the silicone industry, causing the company's stock price to drop by 6.3% the next day and its market value to shrink to 69.1 billion yuan.


Performance pressure and industry challenges
According to the financial report, Hesheng Silicon Industry's revenue for the first three quarters of 2025 decreased by 25.35% year-on-year, with a net profit loss of 321 million yuan, marking the first loss in nearly five years. Analysis indicates that its performance decline is mainly affected by three factors: firstly, Yunnan's power restrictions have led to a 40% reduction in industrial silicon production and a 12% increase in raw material costs; Secondly, the EU's "carbon footprint tracing" policy has forced companies to shut down some high energy consuming production lines, resulting in an annual loss of approximately 80000 tons of production capacity; The third challenge is the impact of bio based silicone rubber technology. The cost of producing highly active silane from rice husks at the Chinese Academy of Sciences has approached the petroleum based route, and the company's traditional product gross profit margin has decreased from 38% to 22%.


Green Transformation and Competitive Breakthrough
Faced with pressure, Hesheng Silicon Industry is accelerating the layout of low-carbon technology. The sugarcane based methanol project, in collaboration with Brazilian chemical giants, is expected to be put into operation in 2026, which can reduce methanol costs by 30% and carbon emissions by 45%. At the same time, the company has invested 2 billion yuan to build a circular economy industrial park, which plans to improve the performance of recycled silicone rubber to 95% of raw materials through building demolition of the silicone rubber recycling system. According to the "Extreme Risk Simulation Report on the Organic Silicon Industry Chain" by Zhongyan Puhua, if Hesheng Silicon Industry can complete technological upgrades before 2028, its market share is expected to rebound from the current 18% to 25%.


Industry Trends and Policy Orientation
Yao Jun, Director of the Planning Department of the Ministry of Industry and Information Technology, emphasized at the regular policy briefing of the State Council on November 10th that the silicone industry needs to achieve a unit energy consumption of 20% lower than the industry average for newly built facilities before 2026, and is required to recycle 60% of building demolition silicone adhesive. At present, leading enterprises such as Dongyue Group and Xin'an Co., Ltd. have launched a plan to replace fluidized bed reactors, which is expected to reduce consumption by 34%. Market analysis suggests that green transformation will become the key to the survival of organic silicon enterprises, while technologically lagging enterprises may face the risk of elimination.