Price trend

In September, the dichloromethane market did not usher in the traditional "Golden September" peak season. Instead, under the pressure of a serious imbalance between supply and demand, the market continued to bottom out and prices fell to a nine-year low.

As of September 28th, the average price of bulk dichloromethane in Shandong Province fell to 1,695 RMB/ton, a 15.04% drop from the beginning of the month and a 36.64% year-on-year decline. The "Golden September" shopping expectations were completely dashed, and downstream stocking sentiment was extremely weak. Market trading was quiet, and companies continued to offer discounts to alleviate inventory pressures.

Analysis of Influencing Factors

Supply Side: Maintaining High Loads and Substantial Supply Pressure

The industry's operating rate remained at a high level of 85%. Although some companies temporarily reduced their workload, this had little impact on the overall loose supply structure. High inventory pressure on companies led to continued price cuts to reduce inventory.

Cost side: insufficient support

Regarding raw material methanol, the methanol market fluctuated narrowly in September, providing limited cost support for dichloromethane. As of September 26, the benchmark price of methanol on Sinochem was 2,253.75 RMB/ton, a monthly increase of 0.91%. Methanol plant operating rates increased month-over-month, with some olefins continuing to be sourced externally. Traditional downstream suppliers also stocked up before the holiday, leading to some inventory reduction. Increased production at Shandong's downstream liquid chlorine production facilities led to price increases in surrounding areas. This upward trend in liquid chlorine prices had failed to reverse the downward trend in dichloromethane, which was driven by supply and demand issues.

Demand side: Domestic and external demand both weakened

Weak domestic demand: Downstream suppliers were only purchasing small, essential orders, lacking the motivation to stock up on large quantities. Furthermore, typhoons had further dampened demand. The National Day holiday will cause some factories to shut down for holidays, reducing actual production days and potentially leading to a temporary decline in demand in early October.

Contraction of external demand: Export volume in August fell by 23.28% month-on-month, which was a key signal indicating that the export momentum that had previously supported the market weakened in September, exacerbating domestic supply pressure.

Market outlook

Some companies have reportedly reported plans to reduce production in October. This will be key to reversing the market downturn. If implemented, these production cuts will effectively ease supply pressure and provide a floor support for prices. The recovery of demand remains uncertain. The National Day holiday will result in fewer effective working days in early October, potentially leading to a temporary decline in demand. Whether exports can return to growth is also uncertain. The market is expected to enter a period of bottoming out and recovery. Pay close attention to the extent to which companies are reducing production.

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