Price trend

In August, the overall dichloromethane market showed a volatile downward trend. Supply-side operating rates continued to climb, while demand remained stagnant. The gap between supply and demand continued to widen, placing significant inventory pressure on companies. Some manufacturers proactively lowered their quotes to accelerate shipments, with some even dropping below the 2,000 RMB/ton mark. According to the SunSirs Commodity Market Analysis System, as of August 29, the average price of bulk dichloromethane in Shandong Province was 2,012 RMB/ton, a monthly decrease of 8.21% and a year-on-year decline of 19.50%.

Analysis of Influencing Factors

Supply Side: Operating Rates Soared, Inventories Was Under Pressure

The industry's overall methane chloride plant operating rate has climbed to around 85%, a six-month high, indicating a significant easing of supply. However, downstream purchasing activity was insufficient, putting pressure on companies to ship goods and leading to a continued accumulation of inventories. Some companies have proactively cut prices to alleviate inventory pressure, further exacerbating bearish market sentiment.

Costs: Methanol and liquid chlorine prices both fell, and cost support was insufficient

For methanol raw materials, continued inventory accumulation at ports and weak downstream demand have hindered supply pressure, leading to price fluctuations and weakness. As of August 28, the benchmark price of methanol on SunSirs was 2,245.83 RMB/ton, down 6% from the beginning of the month. For liquid chlorine, increased supply in Shandong Province was not matched by sufficient demand, leading to a decline in prices. Overall support for dichloromethane costs from the raw material side has significantly weakened.

On the demand side, expectations for a "golden September and silver October" were emerging, but improvements were limited

August remains traditionally a low season for demand, with downstream buyers primarily purchasing for immediate needs, resulting in a quiet market. Exports performed relatively well, with dichloromethane exports reaching 17,562.48 tons in July, a 32.89% increase month-over-month. This was primarily driven by growing demand in Southeast Asia and India, which has alleviated domestic supply pressures to some extent.

Looking ahead to September, demand is expected to see marginal improvement, but will still lack strong drivers. The pharmaceutical industry was gradually entering its peak production season, and rigid demand was expected to steadily increase. The traditional peak season of "Golden September and Silver October" may drive a modest recovery in demand for adhesives, coatings, and other sectors. Demand in the electronics industry will remain generally stable. However, the continued downturn in the real estate industry will continue to constrain growth in demand for areas such as building insulation.

Market outlook

Overall, the dichloromethane market remained oversupplied, with weak cost support and ongoing inventory pressures. Short-term price pressure is expected to persist. A significant rebound in demand in September, driven by the "Golden September and Silver October" shopping season, could provide a slight boost to the market. However, with supply remaining high, potential for a rebound is expected to be limited, with the overall trend likely to fluctuate at a low level. Close attention should be paid to adjustments in production operations, downstream inventory replenishment, and export performance.

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