On the evening of October 8, Dongyue Silicon Materials released its earnings forecast for the first three quarters of 2026. It expects net profit attributable to shareholders of the listed company to be RMB 547 million to RMB 567 million, up 19,048% to 19,748% year on year. Net profit after deducting non-recurring gains and losses is expected to be RMB 589 million to RMB 609 million, compared with only RMB 11.8213 million in the same period last year.
After the market opened on October 9, Dongyue Silicon Materials locked at the 20% limit-up at RMB 17.15 per share, and its total market capitalization exceeded RMB 20 billion. The organosilicon sector strengthened across the board, with Chenguang New Materials, Guibao Technology, Xinyaqiang and others following with gains.
The more than 190-fold increase was directly due to an extremely low base. In the third quarter of 2025, Dongyue Silicon Materials was affected by the "July 20" fire accident, posting a loss of RMB 39.3374 million for the quarter, while net profit for the first three quarters was only RMB 2.8567 million. The company explicitly noted in its announcement that its profit indicators for the current period are not comparable with those of the same period last year.
After excluding the low-base factor, adjusted net profit rose from RMB 11.82 million to RMB 589 million to RMB 609 million, up about 48-fold to 50-fold year on year. Even without considering the profit collapse caused by the fire, the scale of the profit recovery remains notable.
Supply-side production cuts coincide with overseas capacity exits
The organosilicon industry's shift from oversupply in 2024 to a tight balance is the underlying support for the overall earnings recovery.
In mid-November 2025, the industry held a special meeting on production cuts and price increases, and companies reached a consensus to cut production by 30%. Entering 2026, leading companies continued to advance joint output cuts. From June to August, the entire industry implemented a 40% production cut policy, operating rates fell to about 60%, overall industry inventories were at relatively low historical levels, and order backlogs at most monomer producers extended to mid-to-late September.
In July 2026, Dow announced the shutdown of its organosilicon basic siloxane plant in the UK, involving 145,000 tonnes of capacity, about 30.5% of Europe's total capacity. The exit of overseas capacity gives Chinese organosilicon companies room to fill the global supply gap. At present, China's organosilicon capacity (converted to DMC) accounts for nearly 80% of the global total.
A scissors gap emerges on the cost side
Dongyue Silicon Materials said in its announcement that procurement prices for industrial silicon fell year on year, while prices for methanol and methyl chloride rose year on year. Overall unit production costs declined, and the comprehensive gross margin improved.
Dongyue Silicon Materials has a complete industrial chain from metallic silicon powder processing to organosilicon monomers and intermediates, and further to downstream deep-processed products such as silicone rubber, silicone oil, silicone resin and fumed silica. It has an annual production capacity of 600,000 tonnes of organosilicon monomers. This integrated layout gives the company room for cost control in raw material procurement, comprehensive utilization of by-products and other areas.
However, marginal changes also warrant attention. Based on the earnings forecast, the company's single-quarter net profit attributable to shareholders in the third quarter is estimated at approximately RMB 118 million to RMB 138 million, down 41% to 49% from RMB 235 million in the second quarter. Although DMC prices rose in the third quarter, raw material costs such as methanol also moved higher in tandem, narrowing profit margins.
