On December 10, 2025, China's organic silicon industry made significant progress in the "anti involution" campaign, with the key target of 13500 yuan/ton for the core product, dimethylcyclosiloxane mixture (DMC), successfully breaking through, with a cumulative increase of over 21% compared to early November. The industry's profit recovery expectations have significantly increased. This price breakthrough marks the substantial implementation stage of the industry's collaborative production reduction and price adjustment strategy, injecting confidence into upstream and downstream enterprises in the industrial chain.


The industry collaborative production reduction mechanism has been implemented, and prices have reached the standard ahead of schedule
Since November, the organic silicon industry has promoted the process of "anti involution" through three key meetings: on November 12th, Luxi Chemical led an industry meeting and proposed the goal of "reducing production by 30%+raising prices to 13500 yuan/ton", which is planned to be implemented in early December; On November 18th, Hesheng Silicon Industry organized a control level meeting to refine the mechanism for production reduction supervision and price coordination; On December 4th, the industry held another meeting to push DMC prices above 13500 yuan/ton, with the latest quote reaching 13700 yuan/ton. Although the specific production reduction plan has not been fully disclosed, some companies have responded to the call by reducing load operations. According to data from Zhuochuang Information, the operating rates of multiple factories' production lines have been lowered around December, and the expectation of market supply contraction has been strengthened.


Optimization of supply and demand pattern, with demand from emerging fields supporting long-term growth
The core driving force behind this round of price increases comes from improvements in both supply and demand. On the supply side, the concentration of industry production capacity continues to increase, with six listed companies including Hesheng Silicon Industry, Xingfa Group, and Dongyue Silicon Materials accounting for a total production capacity of 62%. Leading enterprises play a key role in implementing production cuts. On the demand side, the demand for new energy, electronic appliances, semiconductors and other fields continues to increase. According to data from the National Energy Administration, in the third quarter of 2025, China's photovoltaic installed capacity will increase by 48GW, and wind power will increase by 22GW, driving the application of organic silicon in battery packaging, cable insulation and other scenarios; At the same time, emerging fields such as humanoid robots and hydrogen energy have opened up growth opportunities, such as the application of silicone sealant in high-pressure hydrogen storage tanks and the core position of silicone in flexible skin of robots.


Expected profit recovery strengthened, capital market responds positively
The upward trend in prices directly drives the improvement of industry profits. According to data from Baichuan Yingfu, as of November 21st, the average gross profit of the organic silicon intermediate industry has increased to 1209 yuan/ton, an increase of 2650 yuan/ton from early November; According to calculations by Caixin, the theoretical profit of DMC in the fourth quarter is expected to reach 437 yuan/ton, and its actual performance may be even better. In terms of the capital market, although the stock prices of leading companies such as Hesheng Silicon Industry and Dongyue Silicon Materials have been weak recently, the overall trend of industry prosperity recovery remains unchanged. According to the third quarter financial reports of companies such as Xingfa Group, the revenue from new energy organic silicon products has exceeded 40%, and the gross profit margin is 15-20 percentage points higher than that of traditional products.


Challenge and Outlook: The intensity and sustainability of production reduction need to be verified
Although the price has reached the standard ahead of schedule, there are still doubts in the market about the implementation of the production reduction plan. Analysts from Longzhong Information pointed out that the industry average operating rate is about 70%. If the benchmark for reducing production by 30% is the current level, the actual reduction in production may be lower than expected. In addition, traditional off-season demand may limit price increases, and downstream companies' replenishment pace may affect price stability. However, with the acceleration of new energy construction during the 15th Five Year Plan period, the demand growth rate for organic silicon as a key supporting material is expected to continue to be higher than the overall industry, and the long-term growth logic remains unchanged.