SunSirs: Silicone Market Sees Cyclical Rebound; Industry Profitability Continues to Recover

As a key new chemical material, silicone is widely used in sectors such as construction, photovoltaics, energy storage, new energy vehicles, and electronics/semiconductors. After enduring a "winter" marked by overcapacity and a sharp drop in prices over the past two years, the silicone market experienced a cyclical rebound in the first half of 2026; industry profitability has continued to recover, and corporate earnings have improved significantly.

Impressive Financial Performance

In the first half of 2026, the silicone industry saw a continued upturn in market conditions, with a clear trend of profit recovery for core products. Data shows that the average domestic market price for silicone DMC (Dimethylcyclosiloxane) reached RMB14,400 per ton during the period, a year-on-year increase of 13%.

"Strong support from the cost side has been a crucial driver of the industry's recovery. The price of industrial silicon—a core upstream raw material—remained low for an extended period, effectively reducing manufacturing costs and completely reversing the previous predicament of 'high costs, low selling prices, and weak profitability' that had plagued the industry," an industry insider told a reporter from Securities Daily.

Bolstered by rising product prices and cost optimization, listed companies across the industry chain saw a collective rebound in performance. Industry leaders such as Shandong Dongyue Silicone Material Co., Ltd. ("Dongyue Silicone"), Hoshine Silicon Industry Co., Ltd. ("Hoshine Silicon"), and Zhejiang Wynca Chemical Industry Group Co., Ltd. ("Wynca") delivered particularly impressive results.

Dongyue Silicone achieved explosive earnings growth; the company reported first-half revenue of RMB2.665 billion (up 14.50% year-on-year) and a net profit attributable to the parent company of 429 million yuan (up 916.22% year-on-year). This surge was primarily driven by improved supply-demand dynamics pushing up product prices, combined with a year-on-year decline in industrial silicon procurement costs, which significantly lowered unit production costs and boosted gross profit margins.

Hoshine Silicon successfully turned a profit, reporting first-half revenue of RMB 10.16 billion and a net profit attributable to the parent company of RMB 324 million. Notably, the company’s net profit attributable to the parent company reached RMB 247 million in the second quarter alone, marking a significant improvement compared to the previous quarter. In the first half of the year, Wynca (Xin'an Chemical) achieved operating revenue of RMB 8.563 billion, a year-on-year increase of 6.26%; net profit attributable to shareholders of the listed company stood at RMB 254 million, up 268.03% year-on-year. The profit generated in the first half alone surpassed the level of net profit attributable to shareholders for the full year of 2025. During this period, the silicon-based new materials sector saw a market recovery from the bottom; the company intensified its strategic layout for high-value-added silicon-based end products and achieved tangible results in overseas market expansion, with silicone product exports rising by 36% year-on-year—reflecting growth in both the volume and quality of its overseas business.

Continued Optimization of Supply-Demand Dynamics

The core driver behind this cyclical recovery in the silicone industry is the optimization of supply-demand dynamics.

In the first half of 2026, no new domestic capacity for silicone monomers came online; as of the end of June, total domestic capacity for silicone DMC remained stable at 3.44 million tons, meaning the short-term increase in industry supply was virtually zero. Industry-wide self-regulation mechanisms continued to be implemented, with major enterprises maintaining operating rates within a reasonable range. This effectively balanced supply and demand and standardized competitive order, laying a solid foundation for price stability and profit recovery. Meanwhile, the accelerated phase-out of overseas capacity further solidified my country's core global advantage in the silicone industry.

Improvements on the demand side were equally evident. "A key feature distinguishing this recovery from previous cycles is the structural upgrade of downstream demand; the silicone industry is gradually shedding its singular reliance on traditional real estate and building materials sectors, with the focus of consumption rapidly shifting toward high-value-added emerging industries," noted an industry insider.

Listed companies across the industry chain are proactively adjusting their product portfolios—reducing the production and sales share of low-margin, general-purpose silicone rubber and silicone oil while channeling core resources into high-value-added specialty silicone businesses—to accelerate their transformation and upgrading.

Data indicates that Wynca has implemented a commercial demonstration project for silicon-based immersion liquid cooling in computing infrastructure. The company has launched a product matrix comprising three series of silicon-based coolants—targeting computing power, energy storage, and fast-charging applications—and has entered the liquid cooling market for supercomputing centers; this business segment is currently in the early stages of commercial expansion. Jiangxi Hongbai New Materials Co., Ltd. is proactively positioning itself in the upstream silicon-based raw materials sector essential for AI computing power. The company plans to establish production capacity for fiber-optic grade high-purity silicon tetrachloride, with products precisely tailored for the high-end optical fiber preform market that supports computing infrastructure; the project is scheduled to commence production in 2027.

As demand surges in emerging high-end sectors, listed companies within the industry chain are poised to unlock a "second growth curve." Zhan Junhao, a partner at Fuzhou Gongsunce Public Relations Consulting Co., Ltd., told *Securities Daily*: "Looking ahead, demand across high-growth sectors—such as high-end electronic packaging, AI computing infrastructure, and humanoid robotics—will continue to be unleashed, driving market expansion for high-end specialty silicone materials." (Source: Securities Daily)

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