On the evening of October 8, Dongyue Silicon Materials disclosed its performance forecast for the first three quarters of 2026, projecting net profit attributable to shareholders of 547 million to 567 million RMB, a year-on-year increase of 19,050% to 19,750%. This striking year-on-year increase brings the supply-demand recovery that began in the silicone industry in late 2025 into the earnings verification spotlight.

Sources of Growth: Higher Prices, Lower Costs, Low Base

Dongyue Silicon Materials stated in its announcement that rising prices for main products, year-on-year declines in industrial silicon procurement prices, and overall reductions in unit production costs jointly drove comprehensive gross margin improvement. From industry data, DMC prices saw a phased increase in the third quarter of 2026—around 13,600 RMB/ton in early September, rising to approximately 14,700 RMB/ton by mid-month, and maintaining mainstream negotiations in the 14,400–15,000 RMB/ton range entering October.

However, it should be viewed rationally: Dongyue Silicon Materials' prior-year comparative period was affected by a fire incident, resulting in a low profit base. The year-on-year increase in this period's performance should not be directly regarded as a signal of a comprehensive industry-wide reversal.

The Broader Picture of Industry Recovery

Dongyue Silicon Materials' performance is not an isolated event. A research report on Hoshine Silicon published by Changjiang Securities on September 27 showed that in the first half of 2026, Hoshine Silicon's silicone intermediate output declined 1.3% year-on-year, while average selling prices rose 5.8% year-on-year. Industry self-discipline has driven supply-demand structure improvement, and product price recovery is expected to gradually enhance silicone segment profits. Jianghan New Materials Chairman Gan Shuguan also stated on October 9 that since the fourth quarter of 2025, the company's product unit prices and sales volumes have both shown upward trends, with industry-wide sales volume and sales revenue conditions clearly improving in 2026.

From the industry operating logic perspective, in November 2025, a silicone industry controlling shareholder meeting discussed industry self-discipline and production pace adjustments, with production reduction targets drawing market attention. Subsequently, some facilities underwent maintenance and supply adjustments advanced, with product prices gradually recovering. Overseas, Dow announced the closure of its basic siloxane facility at the Barry site in the UK, with the exit of high-cost European capacity freeing up market space for domestic enterprises.

Emerging Demand Takes the Baton

Beyond cyclical recovery, application expansion in new energy, electrical and electronics, and semiconductor fields is bringing new growth space to the silicone industry chain. Rapid growth in photovoltaic installations is driving increased adhesive consumption per unit; silicone usage per vehicle for new energy vehicles is significantly higher than for traditional internal combustion vehicles; and AI computing infrastructure construction is driving demand expansion for thermal fluids and thermal pads in immersion liquid cooling.

The silicone industry has gradually emerged from its cyclical trough, but with the traditional off-season of the fourth quarter approaching, the execution intensity of emission reductions and the actual matching degree with end-user demand will determine the sustainability and height of this round of prosperity recovery.

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