Market Overview: 

As of November 28, according to data monitored by SunSirs, the average price of bulk dichloromethane in the market in Shandong Province was 1,695 RMB/ton, a decrease of 5.7% this month. Compared with the same period last year, the price had dropped sharply by 41.35%, and the market as a whole was showing a weak trend.

The market trend in November was volatile: In the first ten days, driven by supply-side contraction, the market successfully rebounded, with prices rising by as much as 6.26%. However, constrained by persistently weak end-user demand, the room for further price increases was limited. Entering the latter half of the month, as supply pressures increased and cost support weakened significantly, the market returned to a downward trend, with prices continuing to decline.

Supply side: Fluctuations in operating rates dominated prices, and inventory pressure triggered competition

Supply contraction fueled rebound: At the beginning of the month, frequent shutdowns or reduced-load operations at several major production facilities caused the overall industry operating rate to plummet to a low of around 65%. This significant reduction in supply lowered company inventories, providing a solid foundation for price support and successfully driving a price rebound.

Supply recovery suppressed the market: As the operating rate gradually recovered to around 78%, the market supply of goods had increased significantly. This had led to a continuous accumulation of inventory pressure for enterprises. To secure limited orders and alleviate inventory pressure, manufacturers had adopted price reduction and promotional strategies, intensifying market price competition and becoming the main driver of price declines in the middle and latter part of the month.

Demand side: Weak domestic and external demand limited the extent of market gains

Domestic demand remained weak: Downstream industries such as refrigerants, pharmaceuticals, and pesticides showed lackluster performance, with purchases mainly driven by rigid demand and small orders, lacking any intention to stockpile on a large scale. Downstream industries generally held high levels of inventory, limiting both their ability and willingness to accept new stock. Although reduced supply temporarily pushed up prices, the lack of support from increased actual demand meant that the price increases were not well-founded.

External demand remained stable but with limited impact: China's dichloromethane exports in October totaled 18,850.28 tons, a slight increase of 0.11% month-on-month, showing stability. However, compared to the massive domestic supply, the export volume was insufficient to effectively absorb the surge in production and could not reverse the negative impact of weak domestic demand.

On the cost side: the collapse of raw material support weakened the price floor

The methanol market was under downward pressure: As a major raw material, the methanol market faced continued pressure from high port inventories, high supply, and weak demand, resulting in overall price pressure. Although factors such as expected gas supply restrictions and coal price support may bring short-term fluctuations with a slight upward bias in the latter half of the month, the fundamental weakness remained unchanged. This month, the benchmark price of methanol from the SunSirs fell by 2.4% to 2,103.33 RMB/ton. The continued decline in raw material costs had weakened the price floor for dichloromethane.

The liquid chlorine market was struggling to find support: The Shandong liquid chlorine market fluctuated this month, with frequent price changes and an overall weak trend, making it difficult to provide effective and sustained cost support for dichlorome

Market Outlook:

In summary, the dichloromethane market was dominated by negative factors:

Supply pressure remains: Industry operating rates have recovered to relatively high levels, and if current operating rates are maintained, market supply will remain ample.

Demand remains weak: Downstream industries were generally performing poorly, and the likelihood of a significant rebound in demand in the short term was low, which would continue to constrain price increases.

Weak cost support: The fundamentals of the methanol market, the main raw material, were weak, and it is expected that strong cost support will be difficult to emerge in the short term.

Therefore, the dichloromethane market is expected to continue facing downward pressure in the short term, with a generally weak trend. Going forward, close attention needs to be paid to changes in upstream raw material prices, the operational status of major plants, and their operating load adjustments; any significant changes in any of these areas could be a key variable in breaking the stalemate.

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