DMC (dimethylcyclosiloxane) prices continued their upward march in the week of April 24, 2025, with the domestic market average rising ¥50/ton to reach ¥14,900/ton. Spot quotes ranged from ¥14,700 to ¥15,600/ton across East China trading hubs, placing the market firmly in striking distance of the psychologically significant ¥15,000 threshold.

The supply side remains the primary driver: monomer plant forward order books are now filled through late May, keeping available spot inventory lean. Downstream buyers with depleted raw-material stockpiles have begun issuing phased replenishment orders, allowing high bid prices to convert into actual transactions. Trade is concentrated in small-lot deals, reflecting cautious buying sentiment despite the bullish headline trend.

Near-term price direction is expected to remain firm to slightly higher. The main downside risk lies in upstream industrial silicon fundamentals — downstream polysilicon destocking pressure is still severe, procurement demand is weakening, and no meaningful supply cuts are visible, which could eventually erode the cost floor supporting DMC.

Ongoing Middle East conflict is disrupting global chemical supply chains and transmitting silicone cost inflation directly into finished consumer products. The world’s largest condom manufacturer, Karex, has announced a planned price increase of 20–30%, citing a 30% short-term demand surge alongside rising freight costs and shipping delays. The company produces more than 5 billion units annually and supplies brands including Durex.

Silicone oil is a critical lubricant in condom manufacturing, and its cost has spiked sharply over the past two months. German chemical giant Wacker Chemie raised silicone product prices effective April 1, while Dow Chemical announced a 5–15% increase across its full silicone portfolio for Greater China in March. These moves reflect upstream producers passing through energy and logistics cost increases triggered by the conflict.

Ammonia — another essential input — faces an even more acute shortage. Its production is heavily dependent on natural gas, and the conflict has halted roughly one-fifth of global commercial liquid ammonia supply. Major manufacturing nations including India are reporting severe shortfalls in silicone oil and related raw materials. The combined cost pressure from silicone and ammonia is expected to sustain a broader downstream price increase cycle.

• Karex price hike — 20–30% increase planned on condom products due to freight and silicone oil cost escalation.
• Wacker Chemie — Silicone product price increase effective April 1, 2025, citing energy and logistics cost pressures.
• Dow Chemical — 5–15% price increase on full Greater China silicone range announced in March 2025.
• Ammonia shortage — Conflict has halted ~20% of global commercial liquid ammonia supply, squeezing downstream silicone manufacturers.

Dow Chemical reported a net loss of $445 million (approximately ¥30.4 billion) for Q1 2026, released on April 23. Net sales fell 6% year-over-year to $9.794 billion, and Operating EBIT declined $76 million driven primarily by price erosion. The headline loss underscores the pricing headwinds facing large-scale commodity chemical producers in the current environment.

Cash flow was the standout bright spot: operating cash from continuing activities reached $1.1 billion — up $1 billion year-over-year — largely due to receipt of legal settlement proceeds from NOVA Chemicals. This cash influx provided Dow with critical liquidity to navigate a challenging quarter.

Within the segment breakdown, the Performance Materials & Coatings division bucked the company-wide trend. Net sales of $2.1 billion held flat year-over-year while Op. EBIT surged 139% to $117 million, driven by favorable currency effects and silicone gel sales growth, particularly in global electronics and North American home and personal care applications.

Runhe Materials (润禾材料) reported a standout 2025 annual performance on April 23, with adjusted net profit surging 40.27% year-over-year to ¥130 million after excluding share-based compensation effects. Revenue rose 6.21% to ¥1.41 billion, demonstrating that disciplined product-mix optimization can deliver outsized margin expansion even in a moderately growing top line.

The company’s two core business lines moved in tandem: silicone deep-processing products generated ¥869 million in revenue (+5.91%), with a gross margin of 24.74%; textile printing and dyeing auxiliaries contributed ¥539 million (+6.51%) at a 30.72% gross margin. Within silicone, three high-growth sub-segments stood out — cosmetic silicone oil posted a three-year CAGR of 47.53% on the back of premiumization trends in beauty and medaesthetic markets; new-energy mold release agents grew revenue 31.59%; and electronic chemicals expanded 11.09%.

Runhe invested ¥57.44 million in R&D in 2025 (4.07% of revenue) and received national enterprise-level certification for its silicone deep-processing capabilities. Looking ahead, the company plans to extend its position along the organosilicon value chain — upstream and downstream — targeting new-energy batteries, AI compute infrastructure, and 5G communications as its next growth vectors.

• Cosmetic silicone oil — 3-year revenue CAGR of 47.53%, driven by beauty, personal care, and medical aesthetics consumption upgrades.
• New-energy mold release agents — Revenue up 31.59% YoY, backed by strong EV battery manufacturing demand.
• Electronic chemicals — Revenue grew 11.09%, with market share gains in advanced packaging and semiconductor applications.
• R&D investment — ¥57.44 million in 2025 (4.07% of revenue), supporting product iteration and technology moats.

Huitian New Materials has incorporated a new wholly-owned subsidiary, Jiangsu Huitian Polymer Materials Co., Ltd., with registered capital of ¥20 million. The company’s business scope covers high-performance fiber and composite material manufacturing and sales, as well as sealing component production — signaling Huitian’s intent to move up the composites value chain.

The move aligns with a broader industry trend of adhesive and sealant specialists diversifying into high-performance polymer substrates to reduce raw material dependency and capture more margin across the value chain. Huitian’s parent company is one of China’s leading industrial adhesive manufacturers.

Jianghan New Materials addressed investor concerns on April 23 regarding China’s latest export tax rebate policy adjustment, confirming that affected products represent only 0.07% of the company’s 2025 revenue. The impact on earnings is effectively negligible.

The company noted it will factor the policy change into future export product pricing, modestly raising quoted prices on the relevant SKUs to preserve margins. This swift pass-through response is consistent with the current tight-market dynamic, where downstream buyers have limited leverage to resist incremental price increases.

The silicone complex is expected to maintain a firm-to-upward bias in the near term, supported by tight monomer plant order books, active downstream restocking, and ongoing cost pressures from Middle East-related energy and logistics inflation. DMC’s path toward and potentially above ¥15,000/ton appears technically and fundamentally supported in the short run.

The key risk to the bullish thesis sits upstream in industrial silicon. A widely anticipated polysilicon capacity reduction meeting has yet to produce concrete outcomes, and in the absence of actual supply cuts, industrial silicon faces heavy downstream inventory accumulation and weakening procurement. Should this overhang translate into a sustained price decline for industrial silicon, the cost floor under DMC would soften — tempering or reversing the rally.

Market participants should monitor two catalysts: (1) the outcome and enforcement strength of any polysilicon industry capacity reduction agreements; and (2) whether Middle East shipping disruptions intensify or begin to ease, which will determine the trajectory of silicone oil freight premiums feeding into global downstream product costs.

• Bullish factor: Order book tightness — Monomer plant pre-sales are fully booked through late May, limiting spot availability.
• Bullish factor: Downstream restocking — Low-inventory downstream buyers are releasing phased replenishment orders, converting high prices into real transactions.
• Risk factor: Industrial silicon oversupply — Polysilicon destocking pressure and weak procurement could erode the upstream cost floor for DMC.
• Risk factor: Polysilicon meeting uncertainty — Expected capacity reduction decisions remain unconfirmed; actual implementation strength is highly uncertain.