Entering an organosilicon industrial park in East China, multiple silicone oil production lines are running at low load. Industry data shows that at the beginning of 2026, the average operating rate of domestic organosilicon monomer companies fell below 60%, with some small and medium-sized plants even halting production temporarily. Surprisingly, despite inventory pressure, companies collectively choose “produce less rather than sell cheap”—a new “price preservation and loss control” logic is reshaping the industry.
This is not blind price support but a rational choice forced by cost structures. Currently, the full cost of one ton of DMC (dimethylcyclosiloxane) has reached ¥11,500/ton, with:
Industrial silicon (grade 421) accounting for over 60% of raw material costs—stable prices but hard to reduce;
Electricity and steam making up 25% of manufacturing costs, with steam prices in northern winter rising 12% YoY;
Environmental and depreciation fixed costs steadily increasing, and older units consuming 15% more electricity per ton than advanced capacities.
“When the selling price drops below ¥11,000, every day of operation is a loss,” says a silicone oil plant operations manager. 2025 financial reports confirm this dilemma: some companies reported Q3 losses exceeding ¥200 million, with cash flow under pressure. “Increase production and you lose, cut production and you stop the loss” has become a reluctant but rational survival strategy.
More importantly, the industry has reached a consensus: low prices do not bring market share, only industry-wide bleeding. Lessons from 2023–2024 show that even if orders are secured, prices below cash cost accelerate the cash chain rupture. Therefore, since November 2025, the core focus of three industry meetings has shifted from “who produces more” to “who stabilizes prices first.”
Leading companies act first: Hoshine and Dongyue leverage integration (own industrial silicon + cogeneration) to control cash costs around ¥9,800/ton, giving them resilience; small and medium plants lacking upstream support voluntarily withdraw from off-season competition, switching to order-based flexible production.
For downstream customers, this marks the end of an era—the expectation that “organosilicon is always cheap” no longer holds. Price fluctuations will oscillate narrowly around the cost line, not plummet uncontrollably. An electronics adhesive formulators notes: “In the past, we waited for price drops to purchase; now suppliers simply say, ‘Costs are fixed, no negotiation.’”
Industry consensus predicts 2026 as a key year for “cutting excess, keeping real value.” When companies prefer to idle rather than sell at a loss, the market is shifting from destructive competition to rational pricing. For users, instead of betting on price drops, it is wiser to reassess supply chain resilience—because the low-price era is over, and reliable supply is the new essential.
