According to SunSirs, the dichloromethane market trended steadily downward—experiencing a slow, narrow decline—during the second half of June. While voluntary operating rate reductions and plant maintenance by manufacturers provided short-term support in the first half of the month, the market was subsequently weighed down by persistently weak off-season downstream demand and a sharp drop in exports. With supplies continuing to flow into the domestic market and manufacturers offering price concessions to move inventory, price levels continued to drift lower. As of June 30, the bulk price of dichloromethane in the Shandong region stood at 1,937 RMB/ton, down 6.97% from the mid-month level.

Analysis of Key Drivers

Supply side: Maintenance activity slightly reduced, but overall supply remained ample.

Dongyue's chloromethane units maintained a low operating rate of 50% for an extended period, and Luxi Chemical continued to scale back production; meanwhile, Dongying Huatai and Jiangsu Liwen underwent short-term maintenance in mid-to-late June and at the end of June, respectively. Although the temporary reduction in available market supply briefly eased the pressure of oversupply, the industry's average operating rate remained high at 75%–80% throughout the month, meaning these periodic cutbacks did not substantially tighten overall supply. Furthermore, Binhua New Materials announced a new 200,000-ton-per-year chloromethane project—to be rolled out in two phases—on June 15; the prospect of this future capacity expansion continued to dampen expectations for a rise in spot prices.

Demand side: Both domestic and external demand were weak, with the off-season acting as a significant drag.

Domestic demand shows structural divergence and overall sluggishness: Demand for the refrigerant R32 remains stable, yet procurement is largely internal (captive use), resulting in limited growth in spot market purchases and failing to drive significant market volume; meanwhile, demand in traditional sectors—such as pharmaceuticals, solvents, and metal cleaning—continues to contract due to the impact of environmental policies and the adoption of substitutes, leaving the overall domestic demand base weak.

Exports weakened significantly, and diversion channels failed: May exports totaled 13,421 tonnes, plunging 45.32% month-on-month and falling 28.45% year-on-year. As Southeast Asia and South America entered the off-season for chemicals in June, overseas purchase orders plummeted; supplies originally intended for export flowed back into the domestic market, further intensifying competition in the spot market and forcing manufacturers to lower prices to drive sales volume.

Cost side: Methanol prices fluctuated downward, with support weakening.

Methanol spot prices fell sharply and continuously during the latter half of June, with the maximum decline exceeding 15%. As feedstock costs simultaneously decreased, the losses incurred by producers narrowed, giving manufacturers ample room to lower prices to move inventory. Meanwhile, liquid chlorine prices in Shandong remained weak—trading between -100 and 300 yuan per tonne—further driving down overall production costs and making it increasingly difficult for price floors to find upward support.

Market outlook

Driven by the interplay of market supply and demand, the dichloromethane market is expected to continue fluctuating within a narrow range in the short term. While localized areas may see brief rebounds due to plant maintenance, the overall scope for a rebound remains limited.

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