Recently, in the domestic chemical industry such as organosilicon, there has been a situation where individual factories have been shut down in a concentrated manner and prices have continued to rise. This phenomenon is mainly driven by the contraction of the supply side, cost push and the improvement of industry expectations. The specific analysis is as follows
The direct cause is the contraction on the supply side
Take the fire incident at Dongyue Silicon Materials in July 2025 as an example. Its 300,000-ton/year organic silicon monomer production capacity (accounting for 50% of the company's total production capacity) was shut down, and the resumption time is uncertain. As a leading enterprise in the industry, the disruption of its production capacity has led to a sharp reduction in market supply. To avoid the risk of price competition, other manufacturers have adopted a strategy of suspending sales to observe the market reaction. A similar situation also occurred in August 2024, when many individual factories collectively closed their sales due to the consensus of "anti-internal competition", and pushed prices back up by reducing supply.
Ii. Cost Push and Strengthening of industry Self-discipline
The fluctuations in the prices of raw materials such as industrial silicon have a significant impact on the pricing strategies of individual factories. For instance, in August 2023, the futures price of industrial silicon rebounded, driving up the costs of individual factories. Some enterprises passed on the cost pressure by closing their positions to support prices. In addition, a consensus of "limiting production to maintain prices" has gradually emerged within the industry. Many facilities plan to reduce production by 20% and improve profit margins by controlling supply-side pressure. This self-disciplined behavior has further strengthened the sustainability of price increases.
Third, improved demand expectations provide support
Although there has been no obvious recovery on the demand side yet, the market's expectations for the traditional peak season of "Golden September and Silver October" are relatively optimistic. For instance, after the July 2025 incident, it was widely believed in the industry that the sector would gradually enter a peak demand season, and downstream enterprises' willingness to stock up would increase, providing support for prices. In addition, the growth in demand for silicone products in emerging fields such as new energy vehicles and photovoltaics has also partially offset the impact of weak demand in traditional industries.
Iv. Analysis of Price Increase and Sustainability
Based on historical data, the price increase after a trading halt is usually between 5% and 10%. For instance, in July 2025, the price of organic silicon DMC rose by over 9% in a single day, and in August 2024, the price of DMC rebounded by 1,000 yuan per ton from a low level. However, the sustainability of the market situation still depends on the duration of production halts, the intensity of demand release, and the inventory level of the industry. If the contraction on the supply side resonates with the peak demand season, prices are expected to continue to rise. Conversely, if demand falls short of expectations or inventory accumulates rapidly, prices may face downward pressure.
