Price trend
In early September, the Shandong dichloromethane market continued its downward trend, failing to capture the anticipated peak market conditions of September. The core reason lay in ample supply and weak demand. Supply-side operating rates remained high, while the anticipated peak demand period of September and October failed to materialize. Trading activity was sluggish, with companies focusing on shipments, discounts and promotions to reduce inventory, and competitive bidding driving prices downward. According to the SunSirs Commodity Market Analysis System, as of September 9th, the average bulk price of dichloromethane in Shandong was 1,940 RMB/ton, down 2.76% from the beginning of the month and a 28.94% year-on-year decline.
Factors influencing price fluctuations:
Supply: Operations were high, and inventories were under pressure
Affected by weak demand, the overall utilization rate of methane chloride plants in the industry had fallen slightly to around 85%, remaining high and providing ample supply. Downstream purchasing enthusiasm was weak, putting pressure on shipments. Companies were cutting prices to alleviate inventory pressures, and the market is likely to remain cautious and consolidate.
Changes on the supply side were crucial. If more companies reduce production loads or shut down due to cost pressures, breakdowns, or unplanned maintenance, this could effectively ease supply pressures in the market, providing support for prices.
Cost side: Methanol prices were rising, strengthening cost support
Regarding methanol, a raw material, domestic olefin demand remains strong. Anticipating a strong September, downstream investors were actively buying, leading to short-term strong and volatile market conditions. As of September 9th, the benchmark price of methanol on SunSirs was 2,271.67 RMB/ton, up 1.72% from the beginning of the month. If methanol prices continue to strengthen, this could squeeze methylene chloride production margins, potentially increasing companies' willingness to maintain price support. Regarding liquid chlorine, insufficient demand in Shandong led companies to offer discounts and price reductions mid-week, with prices temporarily remaining flat compared to the beginning of the month.
Demand side: Purchased on demand, waiting for the traditional "golden September and silver October" peak season to boost sales
Downstream industries overall performed poorly, with high temperatures and major domestic events impacting the operating rates of some companies. Many companies maintained a strategy of purchasing on an as-needed basis, lacking the desire to stockpile large quantities of goods.
Refrigerant R32 is widely used in air conditioning and other fields, and downstream demand remains strong. However, production quota restrictions led to tight market supply, prompting companies to hold prices high and be reluctant to sell. The average price is expected to rise to 62,000-64,000 RMB/ton from September to November. Furthermore, due to production quota restrictions and limited demand for the raw material, the continued upward trend in the price of R32 has not driven up the price of the raw material dichloromethane.
September and October are traditionally peak seasons for industrial production. It need to closely monitor the recovery of downstream demand. If downstream demand rebounds beyond expectations, it could drive a wave of inventory replenishment.
Market outlook
The dichloromethane market started off sluggishly in September, with weak demand being the core issue. Whether prices can rebound depends crucially on whether there is a significant contraction on the supply side, such as large-scale plant maintenance, and whether the traditional "golden September, silver October" peak season can truly boost downstream demand. In the short term, a significant market rebound is unlikely, and the market is expected to remain volatile, bottoming out, or operating at a low level.
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