Market Overview: (December 16-23)

According to the commodity price analysis system of SunSirs, as of December 23rd, the average price of bulk dichloromethane in Shandong province was 1,710 RMB/ton, a decrease of 4.47% within the week. The year-on-year decline reached 39.25%, and the imbalance between supply and demand continued to suppress the market, causing it to fluctuate weakly within a historically low range.

Supply side: High operating rates were the main source of pressure

The industry maintains high operating rates: The high operating rate of the domestic methylene chloride industry was the core factor suppressing the market. Although some plants (such as Jiangxi Liwen) reduced their operating rates, the impact on the overall supply landscape was limited.

The main strategy was to clear inventory: Companies were generally facing inventory pressure and were largely adopting strategies of offering discounts to move products and alleviate this pressure.

Demand side: Domestic demand was weak, relying on exports to absorb the surplus

The main downstream refrigerant R32 offered limited support: its operating rate was decent, running at about 80%, but because it relies heavily on upstream raw materials, the actual purchase volume of externally sourced dichloromethane was limited. Demand in other sectors was sluggish: demand in the pharmaceutical and electronics sectors was stable but small in volume; the traditional solvent sector was squeezed by both the economic downturn and low-priced substitutes. Purchasing sentiment was extremely cautious: downstream buyers generally adoptted a "purchase on demand, replenish small quantities when prices are low" strategy, and there was a lack of speculative and stockpiling demand in the market.

Dichloromethane imports and exports showed extreme divergence: this phenomenon confirmed the weakness of domestic demand. Imports: only 17.3 tons in November, a decrease of 15.81% month-on-month, which was negligible, indicating no import demand in the domestic market. Exports: reached 23,386.69 tons in November, an increase of 24.07% month-on-month, becoming a key channel for absorbing excess domestic capacity. However, this was a passive choice under weak market conditions, only providing bottom support and unlikely to drive a market turnaround.

Cost side: Raw material prices were fluctuating, squeezing companies' profit margins

Liquid chlorine: Increased maintenance shutdowns downstream have led to weaker demand and falling prices.

Methanol: Prices rebounded due to inventory reduction at ports and reduced import expectations. As of December 23rd, the benchmark price of methanol according to SunSirs was 2,140 RMB/ton, representing a 1.78% increase during the period.

Although the price of the main raw material, liquid chlorine, had fallen, the weak price of dichloromethane had significantly squeezed the profit margins of manufacturers.

Market Outlook

Short-term negative factors were dominant, and the market is expected to remain weak, with prices likely to continue fluctuating and testing historical lows. Attention should be paid to any substantial adjustments in supply and changes in inventory. Until there is a clear driver for production cuts, the market is unlikely to develop a sustained upward trend.

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