On August 20, 2026, Dongyue Silicone Materials (300821.SZ) released its semi-annual report, capturing industry attention with a striking set of figures: the company achieved operating revenue of 2.665 billion yuan in the reporting period, a year-on-year increase of 14.5%; net profit attributable to shareholders reached 429 million yuan, skyrocketing 916.22% year-on-year; and basic earnings per share stood at 0.36 yuan, up 800% year-on-year. This data not only marks the company's highest quarterly profit since the third quarter of 2022 but is also widely interpreted as a strong signal that the silicone industry is emerging from its cyclical trough .
The Logic Behind Profit Recovery: Price Rebound + Low Costs + Industry Coordination
From the pricing perspective, the average market price of silicone DMC in the first half of 2026 rose by approximately 13% year-on-year, with mainstream quotations holding in the 13,400-14,000 yuan/ton range (delivered, net of water) . Concurrently, the price of core raw material metallic silicon remained relatively low—for example, 421# metallic silicon in Sichuan was quoted at around 9,500 yuan/ton —providing domestic silicone enterprises with a significant cost advantage.
More critically, structural changes are occurring on the supply side. Since November 2025, the domestic silicone industry has held multiple high-quality development meetings centered on capacity coordination for profit recovery. The Zhejiang Ningbo Silicone High-Quality Development Conference in February 2026 resolved to raise the industry-wide emission reduction ratio to 35%, with the mainstream executed price of DMC rising to 14,300 yuan/ton. Industry insiders point out that the sector is gradually shifting from "involutionary competition" toward orderly development, and the logic of profit recovery is materializing.
Overseas Capacity Contraction Opens Window for Domestic Substitution
In mid-2026, global chemical giant Dow Chemical announced the closure of its Barry, UK, basic siloxane plant, involving 145,000 tons/year of European capacity—approximately one-third of total European capacity . With domestic silicone capacity already accounting for over 75% of global capacity, the strategic contraction of overseas giants further reinforces the global supply position of China's silicone industry.
Risks and Outlook
According to a CITIC Securities research report, although industry profits recovered significantly in the first half of the year, silicone prices in the second half of 2026 are still expected to remain in the 11,500-13,000 yuan/ton range, continuing to benefit downstream deep-processing enterprises. Additionally, the cancellation of export tax rebates for primary-form polysiloxanes, effective April 2026 , may put short-term pressure on exports, but in the long run it could force the industry to shift from subsidy reliance toward high-value-added development. Dongyue Silicone's semi-annual report may well be just the prelude to an industry recovery.
Dow Chemical Shuts Down UK Plant, Accelerating Domestic Substitution in Silicones
In mid-2026, news from Europe stirred widespread discussion in the silicone industry—global chemical giant Dow Chemical officially initiated procedures to shut down its Barry, UK, basic siloxane plant, with complete exit expected by the end of 2027. Following the closure of this 145,000-ton/year facility, Europe's local siloxane supply will be reduced by nearly one-third .
European Capacity Contraction Reshapes Global Supply Landscape
Dow's move is not an isolated event. In recent years, overseas silicone enterprises have faced multiple pressures including tightening environmental standards and high energy costs, with capacity contraction becoming evident. Meanwhile, Chinese silicone capacity has continued to expand. In 2024, domestic silicone capacity reached 3.19 million tons, accounting for over 75% of the global total of 4.25 million tons. The global silicone supply center is rapidly shifting toward China.
Industry analysts suggest that Dow's withdrawal from its UK plant will alter the European supply-demand balance in the short term, creating an opportunity window for Chinese silicone exports. Data shows that China's silicone export growth rate reached 14.5% in the first half of 2026, with first-quarter growth once surging to 53% due to pre-rebate-cancellation concentrated exports .
"Anti-Involution" Advances as Industry Moves Toward Orderly Development
On the domestic front, industry self-discipline coordination mechanisms are also deepening. The February 2026 Ningbo conference raised the industry-wide emission reduction ratio to 35% and the mainstream executed DMC price to 14,300 yuan/ton. To date, the silicone industry has held six meetings since November 2025, centered on profit restoration and curbing low-price competition.
Meanwhile, there has been virtually no new domestic silicone capacity in 2026, with only a few planned projects scheduled for 2027. The material slowdown in supply, combined with active production cuts by leading enterprises and low industry inventories, has gradually shifted the silicone market from oversupply toward a tight supply-demand balance.
Opportunities and Challenges Coexist
Of course, the industry recovery is not without obstacles. Effective April 1, 2026, the export tax rebate policy for primary-form polysiloxanes was officially canceled, and second-quarter export orders face phased downward pressure . At the same time, fluctuations in European natural gas prices may still affect the pace of local capacity exits, while adjustments in domestic leading enterprises' production schedules will also influence supply patterns.
Dow's factory closure represents both a challenge and an opportunity. For domestic silicone enterprises, this is not only a window of opportunity to capture international market share but also a critical moment to drive technological upgrades and transition toward high-value-added products.
More information, please click here.
