Market Overview: (January 17-27)

Supported by a proactive contraction in supply, the dichloromethane market saw a slight upward shift in price, exhibiting a "stable yet firm" trend. According to monitoring data from the SunSirs commodity price analysis system, as of January 27th, the average price of bulk dichloromethane in Shandong province was 1,790 RMB/ton, representing a 2.43% increase during the period. The main driving force behind the market shifted from "weak demand" to a combination of "cost support and supply contraction."

Supply side: Reduced plant utilization became a key supporting factor

During this period, the most significant change stemmed from proactive adjustments on the supply side:

Concentrated production cuts and declining operating rates: Major production facilities such as those in Luxi and Jinling reduced their operating rates to 50-70%. As a result, the overall industry operating rate continued to decline from 75.8% in mid-month, effectively reducing market supply flexibility.

Inventory levels were within a healthy range: manufacturers were actively controlling inventory, while traders generally maintained zero or low inventory levels. Therefore, despite moderate demand, the market had not experienced significant inventory pressure, providing a buffer for prices.

Cost side: The double increase in raw material prices provided strong support

Cost pressures increased significantly, and companies had very little willingness to lower prices:

Methanol prices were rising: Supported by reduced imports, increased shipping costs, and strong downstream demand, the methanol market was strengthening. As of January 27th, SunSirs' benchmark price for methanol rose to 2,315 RMB/ton, an increase of 2.85% during the period.

Liquid chlorine prices remained firm at high levels: The ex-factory price of liquid chlorine in tank trucks in Shandong province remained at a high level of 350-450 RMB/ton. The simultaneous increase in the prices of the two main raw materials led to a significant increase in costs for methane chloride companies, resulting in production losses. This cost pressure provided strong support for dichloromethane prices.

Demand side: Primarily driven by essential purchases, limiting the extent of price increases

The demand side failed to resonate with the supply contraction, limiting the extent of the market rebound:

Downstream sectors purchased only as needed: Downstream industries maintained only essential demand and did not engage in the concentrated stockpiling typically seen before the Spring Festival, resulting in generally lukewarm market activity.

Market sentiment was cautious: Traders were generally adopting a wait-and-see attitude, purchasing small quantities on an as-needed basis, resulting in weak overall market liquidity and a lack of strong price support from the demand side.

Market outlook: The market is experiencing a tug-of-war between costs and demand. A narrow range of fluctuations is expected.

Overall, the market is caught in a dilemma of "cost support at the bottom, demand capping at the top":

Difficult to rise: Downstream demand is insufficient, lacking the support of increased trading volume, making it difficult for prices to break through resistance levels.

Difficult to fall: Producers are already on the verge of losses and are stabilizing prices by reducing production, providing strong cost support.

Therefore, it is expected that the dichloromethane market will maintain a narrow range of fluctuations in the short term. Any directional breakthrough in prices will require unexpected changes in demand or further significant adjustments in supply.

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