Price trend: The market showed a unilateral downward trend (January 17th - 28th)

In the latter half of January, the domestic dimethyl carbonate (DMC) market, driven by ample supply, saw a continuous decline in prices, accelerating its downward trend. According to the commodity price analysis system of SunSirs, as of January 28th, the average price of industrial-grade dimethyl carbonate in China was 3,750 RMB/ton, a decrease of 5.7% during the period.

Core contradiction: The worsening imbalance between supply and demand was the main reason for the price decline. New production capacity from companies like Jingmen Yuanhan had come online, while downstream demand for electrolytes and traditional applications remained weak, leading to continuously increasing market inventory pressure.

Core driving factors

1. Supply side (strong negative factor): Increased production capacity coexisted with high operating rates

New production capacity continued to be released: On January 13, the Yuanhan Battery Materials precursor project in Jingmen, Hubei, began trial production, and its 200,000 tons/year dimethyl carbonate plant started supplying products to the market. This was the most significant increase in supply during this period, completely changing market supply and demand expectations.

Existing facilities were operating at high capacity: Against the backdrop of already high industry production capacity, major facilities continued to operate at high utilization rates, with no large-scale maintenance plans, exacerbating the pressure on spot supply.

Companies actively reduced inventory: Faced with the Spring Festival holiday and bearish expectations, manufacturers and holders of goods had a strong desire to accelerate inventory reduction and offered discounts before the holiday, and this proactive price reduction behavior had amplified the price decline.

2. Demand side (weak support): Downstream purchasing by major buyers had slowed down across the board

Electrolyte demand fell short of expectations: Electrolyte manufacturers were only making small, essential purchases of dimethyl carbonate due to lower-than-expected growth in end-user battery demand and a shift in focus to stocking up on raw materials such as lithium carbonate, resulting in a collapse in demand support.

Traditional downstream inventory replenishment concluded: Traditional downstream industries such as polycarbonate (PC) and coatings had largely completed their inventory replenishment before the Spring Festival. Although the long-term supply and demand outlook for the PC industry was positive, in the short term, production was stable but slightly declining due to the holiday and macroeconomic environment, resulting in weak demand for dimethyl carbonate (DMC) raw materials.

The "buy on the rise, not on the fall" mentality: When a downward price trend becomes clear, downstream buyers generally hold cash and wait, anticipating even lower prices, leading to increasingly sluggish market transactions.

3. Cost side (limited support): Raw material prices were fluctuating with ups and downs, profit margins were shrinking

Propylene oxide: The price fell by 5.02%. As one of the main raw materials for DMC, its weakening directly reduced the cost support for DMC. Coupled with the narrowing profit margins of the EO/PO transesterification method, companies were more inclined to lower prices to reduce inventory.

Methanol: Prices increased by 3.08%, but methanol's proportion in DMC raw materials was relatively low, and the decline in propylene oxide prices was even greater, so the overall cost side still showed a weak trend.

Dimethyl ether: Prices remained stable, with no significant impact on DMC costs.

Market Outlook:

Overall, it is expected that the dimethyl carbonate market will maintain a "weak and stable, low-level fluctuating" pattern before the Spring Festival.

Before the holiday (until early February): As downstream factories and logistics operations gradually shut down, the market will enter a state of "prices without transactions," with extremely sluggish trading activity. Under the dual pressure of ample supply and a lack of demand, prices are unlikely to rebound and are expected to consolidate at their current low levels.

Post-holiday critical turning point (late February): The market turning point depends on the pace of downstream businesses resuming operations after the holiday. If downstream demand recovers as expected in late February, and if the supply side sees concentrated maintenance shutdowns in the spring to offset increased production capacity, this will be crucial for whether prices can stabilize and stop falling. Close attention should be paid to the operating plans of major production facilities.

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