Silicone Market: DMC Nears ¥15,000 as Supply Chain Tightens

China’s dimethyl cyclosiloxane (DMC) market continued its upward trajectory as of April 24, 2026, with the average market price reaching ¥14,900 per ton — up ¥50 from the prior period — and spot bids touching ¥15,600/ton at the top end of the range.

Supply tightness is the primary driver. Monomer producers have forward sales booked through late May, keeping spot liquidity constrained. As downstream processors work through existing inventories, selective restocking demand is emerging, allowing high posted prices to be confirmed in actual transactions. Most trades remain small-lot in nature, reflecting cautious buying sentiment against a still-elevated price backdrop.

The near-term bias is moderately bullish: fundamentals support continued price firmness, though cost-side variables introduce uncertainty. Industrial silicon futures remain sensitive to news around capacity curtailment meetings in the polysilicon sector, and the actual outcome of those discussions has yet to be determined. Independently, industrial silicon’s own supply-demand balance shows persistent downstream inventory accumulation and softening procurement — factors that could gradually erode the cost floor beneath DMC.

Ongoing conflict in the Middle East is creating measurable disruptions across global chemical supply chains, pushing up energy, logistics, and raw material costs for silicone producers and their downstream customers.

One high-profile downstream effect: Karex, the world’s largest condom manufacturer, announced plans to raise product prices by 20–30% in the near term, citing a 30% short-term demand surge combined with elevated freight costs and shipping delays. Silicone oil — which serves as the critical lubricant coating on latex condoms — is a key input whose price has risen sharply in recent months. The company produces more than 5 billion units annually and supplies brands including Durex.

Upstream, major chemical producers have already acted. Wacker Chemie announced silicone product price increases effective April 1, while Dow Chemical issued a 5–15% price increase across its silicone portfolio for the Greater China market in March. Ammonia, another key input in downstream silicone processing, faces its own supply shock: the conflict has halted roughly one-fifth of global commercial liquid ammonia supplies due to the heavy dependence of ammonia synthesis on natural gas. Indian and other Asian manufacturers are reporting serious silicone oil input shortages as a result of compounding raw material pressure.

• Wacker Chemie — Announced silicone product price increases effective April 1, 2026, citing energy and logistics cost inflation.
• Dow Chemical (China) — Raised full silicone product line prices 5–15% for the Greater China region in March 2026.
• Karex (Condoms) — Plans 20–30% end-product price hike; silicone oil cost surge is a core driver for the world’s largest condom maker.
• Ammonia Supply Shock — Roughly 20% of global commercial liquid ammonia supply disrupted; India and other manufacturing hubs report serious shortages.

Dow Chemical posted a net loss of $445 million (approximately ¥3.04 billion) for Q1 2026, even as its operating cash generation hit $1.1 billion — a year-over-year improvement of $1 billion — providing a key financial buffer.

Net sales for the quarter were $9.794 billion, down 6% year over year, with operating EBIT of $154 million declining $76 million from the prior-year period. The primary culprit was broad-based price erosion across the Packaging & Specialty Plastics and Industrial Intermediates & Infrastructure segments, both of which posted year-over-year declines. The strong cash generation was largely attributable to a legal settlement payment received from NOVA Chemicals.

The standout performer in the quarter was the High Performance Materials & Coatings segment, which bucked the group-wide decline. While net sales of $2.1 billion held flat year over year, segment Op. EBIT surged 139% to $117 million — an increase of $68 million. Within this segment, silicone gel volumes drove growth in Consumer Solutions, with particularly strong demand from global electronics applications and North American home and personal care markets. Acrylic monomer volumes also rose, partially offsetting price declines in the Coatings & Performance Monomers business.

MetricQ1 2026YoY Change Net Sales$9.794B–6%Net Income (Loss)–$445Mn/mOperating EBIT$154M–$76MCash from Operations$1.1B+$1.0BHP&C Net Sales$2.1BFlatHP&C Op. EBIT$117M+139%

Runhe Materials (润禾材料) reported strong 2025 full-year results, with adjusted net profit (excluding share-based compensation) reaching ¥130 million, up 40.27% year over year — the most significant earnings expansion the company has seen in recent years.

Revenue grew 6.21% to ¥1.41 billion. The two core business lines advanced in parallel: silicone deep-processing products generated ¥869 million in revenue (+5.91%) at a gross margin of 24.74%, while textile printing and dyeing auxiliaries contributed ¥539 million (+6.51%) at a higher gross margin of 30.72%. The combination of modest top-line growth and meaningful margin improvement reflects deliberate product mix upgrading rather than volume-driven expansion.

Several high-growth sub-segments were the primary profit engines. Cosmetic silicone oil delivered a three-year revenue CAGR of 47.53%, driven by premiumization trends in beauty, personal care, and aesthetic medicine. New energy release agents posted revenue growth of 31.59%, propelled by strong downstream demand and close technical alignment with customer specifications. Electronic chemicals grew 11.09% as the company deepened its penetration in semiconductor-adjacent applications.

Looking ahead, Runhe plans to extend its silicone value chain both upstream and downstream using capital markets access, targeting higher-value formulations for new energy, AI computing infrastructure, and 5G communications. The company has received national-level enterprise certification, reinforcing its leadership position in silicone deep-processing niches.

• Cosmetic Silicone Oil — 3-year CAGR of 47.53%, outperforming all other product lines; growth driven by beauty, personal care, and aesthetic medicine premiumization.
• New Energy Release Agents — Revenue up 31.59% YoY; tight technical fit with EV battery and photovoltaic manufacturing specifications.
• Electronic Chemicals — Revenue up 11.09% YoY; market share gains in semiconductor and advanced packaging applications.
• R&D Investment — ¥57.44 million invested in 2025 (4.07% of revenue), funding independent technology development and product iteration.

Huitian New Materials has incorporated a wholly owned subsidiary, Jiangsu Huitian Polymer Materials Co., Ltd., with a registered capital of ¥20 million, according to corporate registry data.

The new entity’s registered business scope includes high-performance fiber and composite material manufacturing and sales, as well as sealing component manufacturing — areas adjacent to Huitian’s existing adhesives and sealants expertise. The move signals a strategic push into structural composites and advanced polymer substrates, product categories with growing demand in aerospace, new energy vehicles, and industrial equipment.

The establishment of a dedicated subsidiary, rather than expanding via the parent entity, suggests Huitian is pursuing ring-fenced development of this product line — a common structure for Chinese chemical companies incubating technically distinct business units with separate management and capital allocation.

Jianghan New Materials (江瀚新材) disclosed on April 23 that recent adjustments to China’s export tax rebate policy affect products representing only 0.07% of its 2025 revenue — a negligible financial impact the company does not expect to materially affect earnings.

The company stated it will factor the policy change into future export pricing by selectively raising prices on affected products to preserve margin. The disclosure is a useful benchmark: it illustrates that for most diversified silicone intermediates producers with primarily domestic revenue bases, the current export rebate reform cycle poses limited direct risk, though it may modestly shift competitive positioning between exporters and domestic-focused players.

The short-term outlook for China’s silicone market remains cautiously bullish. Pre-sold monomer inventory through late May, restocking demand from low-inventory downstream buyers, and persistent geopolitical pressure on energy and logistics costs all point to continued price support in DMC and derivative products.

The key risk is the cost floor. Industrial silicon — DMC’s primary feedstock — has its own supply-demand dynamics that are not unambiguously supportive of high prices. Downstream polysilicon overcapacity has yet to be meaningfully curtailed, procurement demand remains soft, and no significant supply reductions have been announced. If a widely anticipated industry capacity coordination meeting fails to produce actionable cutbacks, industrial silicon prices could soften, gradually eroding the cost justification for elevated DMC levels.

Strategically, the divergence in corporate performance underscores a structural theme: commodity-grade silicone volumes remain under margin pressure, while high-value derivatives — cosmetic silicone oil, electronic chemicals, new energy formulations — are growing faster and generating superior returns. Companies with the product mix and technical capability to migrate up the value chain are the clearest beneficiaries of current market conditions.

• Bullish factors — Booked forward sales through May, selective restocking demand, geopolitical supply disruption, and major producer price increase announcements.
• Bear risk — Industrial silicon oversupply, weak polysilicon capex, and uncertainty around capacity curtailment outcomes could erode DMC’s cost floor.
• Structural winner — High-value derivatives (cosmetic silicone oil, electronics, new energy) are outperforming commodity-grade volumes in both growth and margin.

DMC is approaching ¥15,000/ton on tight near-term supply, but the durability of the rally depends on whether upstream industrial silicon can sustain its own cost floor amid persistent polysilicon sector overcapacity.