CITIC Securities: Silicon-based materials industry is waiting to be repaired to benefit high-growth downstream sectors

The Zhitong Finance App learned that CITIC Securities released a research report saying that the silicon-based materials industry is currently consolidating at the bottom of the cycle. However, the supply side has not experienced deep losses. The industry has spontaneously cleared up difficulties. Currently, the “anti-internal volume” strength or price support is limited. 2026H2 further tests the contradiction between supply and demand. The bank expects 2026H2 silicone prices to be 11,500 to 13,000 yuan/ton, which is still relatively low. The bank suggests focusing on companies whose silicon-based materials industry extends to the booming downstream circuit.

CITIC Securities's main views are as follows:

26H1 review: Industry profits have declined again after recovery, and cash flow is still steady

The overall profit of the 2026H1 industry has been repaired, with a significant year-on-year increase. According to Dongyue Silicon's 2026 semi-annual performance forecast, its 2026H1 net profit is estimated to be 424 to 444 million yuan, with a median value of 434 million yuan. Based on the median calculation, its 2026Q2 profit is 240 million yuan, +24% month-on-month, the best level in a single quarter since 2022/Q3. Since June 2026, silicone prices have loosened, fluctuated greatly, and industry profits have declined again, but they have been able to maintain good profits for leading companies. The cash flow of the industry has always been steady. Since 2020, no cash flow loss has been experienced, and the industry is running relatively healthy.

Silicone export tax rebates were cancelled, and silicone exports grew on a pulse in the first quarter

The growth rate of silicone exports from 2024-2025 was 34% and 2% respectively, the export growth rate from January to June 2026 was 14.5%, and the growth rate of silicone exports reached 53% in 2026Q1, mainly due to concentrated exports before export tax rebates. According to the Ministry of Finance's announcement, the silicone export tax rebate was abolished in April 2026. Looking at the long term, the bank believes that the cancellation of export tax rebates will help curb domestic exports of primary raw materials at low prices, force enterprises to develop deep processing with high added value, reduce the risk of price wars with tax rebates, and reduce the risk of overseas trade friction.

Silicone exports may peak in 2026 and grow in 2027

China's silicone is mainly exported to South Korea, India, Europe, etc. The bank believes that the growth rate of silicone exports from China to South Korea has slowed significantly, and there is a lot of potential space in the Indian market. India may become the largest exporter of silicone in China in 2026. The bank expects export growth momentum to resume in 2027 due to the partial withdrawal of Dow Chemical's silicone production capacity after 2027.

2026H2 silicone prices may remain low, which is beneficial to downstream deep processing enterprises

The bank believes that the “anti-internal roll” may have limited price support. 2026H2 will further test the contradiction between supply and demand. The current export momentum of silicone is weakening, 2026H2 silicone prices may remain relatively low, and the downstream deep processing industry is expected to continue to benefit.

Investment strategy: Companies focusing on the expansion and expansion of silicon-based materials in the downstream boom.

The bank believes that the low price of silicone intermediates is beneficial to downstream deep processing companies, and that the current boom in the silicone industry is mainly in the fields of lithium batteries, photovoltaics, new energy sources, and semiconductor chips, where domestic replacement space is broad.

Risk factors:

The “reversal” of the silicone industry fell short of expectations; the growth rate of silicone exports fell short of expectations; industry competition intensified; industrial silicon futures and spot prices fluctuated sharply; and downstream verification of related products fell short of expectations.