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SunSirs: China DME Market Returns to Weakness

July 29 2020 16:08:02     SunSirs (Selena)

Since July, the DME Market has reached the bottom and rebounded. From July 1 to 26, it showed an upward trend until the turning point appeared on July 27. The market returned to rationality and fell in a weak position. According to the data monitoring of SunSirs, the average price of DME in Henan market on July 26 was 2,466.67 RMB/ ton, and that on July 27 was 2,436.67 RMB/ ton, with a one-day drop of 1.22% and an increase of 11.09% compared with the beginning of the month (July 1).

Due to the long-term downturn of DME in the early stage, the price has been at a low level, most enterprises are facing a loss situation, some enterprises are forced to repair or low load production, and some enterprises are limited in sales. Henan, as the main production area of DME, has basically balanced production and sales. Under this favorable situation, the DME market ushered in a price rise in July. It can be seen from the trend chart of DME in July that from July 1 to 12, the market growth was not obvious, and the price rose steadily; from July 13 to 17, the market rose rapidly, with the weekly increase of 6.57%; from July 18 to 26, the market returned to rationality, the rising trend slowed down, and the period of high consolidation was dominated; until July 27, there was a downward market.

Due to the influence of seasonal factors, the current hot weather, the market terminal demand is relatively limited, downstream delisting, consumption of inventory; the market trading atmosphere has turned light. At present, the weakness of international crude oil has a negative impact on the market, and the civil gas market has weakened. On July 27, many regions lowered the ex factory prices, and DME fell due to the impact. Taking Henan Xinlianxin as an example, the price was stable for two consecutive days from July 25 to 26, until July 27, the price was first reduced by 20 RMB/ ton, then the price was adjusted again, and the minimum policy was implemented from July 27 to 28. At present, Henan Province is mainly down regulated slightly, while there is no obvious change in Hebei Province and Shandong Province, and the quotation is stable. At present, the operating rate of DME market is only about 10%.

The cost of methanol has been mainly reduced previously, but the civil situation of LPG has not been strengthened, so the factory price has been reduced intensively. The weakness of both methanol and LPG affected the market mentality. After the downstream replenishment, the market was withdrawn and the mentality was more cautious. However, the current enterprise inventory is operating at a low and medium level, and the pressure is small, so it is mostly adjusted according to its own situation. It is expected that in the short term, China DME market will be dominated by narrow range consolidation.


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