Silicone prices have continued to rise recently. In the first half of 2026, the average price of organic silicon DMC reached 14,400 yuan/ton, a year-on-year increase of 13%; entering August, prices climbed steadily. As of August 31, the price of DMC in Shandong rose to 13,600 yuan/ton, an increase of 4.62% from the beginning of the month. This round of price increases is driven by supply contraction, cost improvement and demand escalation.
The supply side is the core driving force. At the end of 2025, the industry reached a consensus on "anti-involution" production cuts, which will continue to be implemented in 2026. The operating rate dropped to about 60%, and there was no new production capacity in the first half of the year. Overseas, Dow Chemical shut down 145,000 tons of production capacity in the UK and reduced European production capacity by nearly one-third. The contraction in supply effectively alleviates inventory pressure.
On the cost side, upstream industrial silicon prices have been operating at low levels, reducing production costs and reversing previous losses. Taking Dongyue Silicon Materials as an example, net profit attributable to the parent company in the first half of the year increased by 916% year-on-year, and corporate profits improved significantly.
On the demand side, silicones are getting rid of their dependence on the construction industry and turning to emerging fields such as new energy vehicles, photovoltaics, and AI computing power. The amount of silicone used in a single new energy vehicle is about eight times that of a fuel vehicle. The demand for high thermal conductivity insulation materials in AI servers is also rapidly increasing, providing long-term support for price increases.
Looking forward to the market outlook, industry self-discipline and overseas clearing will continue to support prices, but the upside needs to be dynamically assessed based on the pace of demand fulfillment. For consumers, the cost of downstream products such as sealants and silicone products may rise, and the effect of price increases is quietly being transmitted to all aspects of life.