Price trends

According to SunSirs, the dichloromethane market generally exhibited a trend of fluctuation with an upward bias during the first half of July. As of July 16, the mixed bulk price of dichloromethane in the Shandong region stood at 2,140 RMB/ton—a 9.6% increase from the beginning of the month—marking a significant interim recovery.

Analysis of Key Drivers

Cost side: Methanol market conditions have seen a temporary recovery; while there is a floor supporting prices, the upside potential remains limited.

A recovery in the methanol market, driven by international variables, has provided critical cost support for a rebound in dichloromethane prices. Heightened geopolitical risks in the Middle East—triggered by news on July 14 regarding shipping routes involving the U.S. and Iran—have fueled expectations of tighter methanol supplies. Consequently, spot methanol prices have risen across various regions in China, directly bolstering the resolve of dichloromethane producers to maintain higher prices and driving a series of incremental market price increases.

However, the upside potential for methanol prices is limited, meaning the supportive effect on dichloromethane is unlikely to intensify significantly. With a concentration of methanol imports expected to arrive at domestic ports in the latter half of July, port inventories are projected to rise; combined with generally weak end-user demand across the entire industry chain, methanol lacks the momentum to drive a sharp price surge, serving instead only to establish a firm price floor for the dichloromethane market.

Supply Side: Ample Overall Supply and Regional Divergence Bolster Market Resilience

Domestic operating rates for chloromethanes remain at medium-to-high levels, characterized by divergent operational trends, with the industry-wide operating rate stabilizing between 78% and 80%. There have been no instances of concentrated maintenance or large-scale shutdowns among major production units; key facilities in East China are maintaining steady, full-capacity output, while operating rates in the Southwest are steadily recovering, even as units in North China continue to run at low loads. This relatively ample overall supply, combined with low industry inventory levels, has effectively established a solid price floor, eliminating the risk of a sharp market downturn and providing robust supply-side support for a mid-month price recovery and rebound.

Demand Side: Sluggishness during the traditional off-season; essential demand provides a floor, but incremental growth is lacking.

July marks the traditional off-season for chemical consumption. Overall demand from downstream sectors for dichloromethane has been weak, acting as the primary constraint preventing a significant market rebound. Traditional downstream industries—such as coatings, adhesives, and pharmaceutical intermediates—have seen low operating rates due to the off-season and high temperatures. Consequently, there is little appetite for restocking, a lack of large-volume bulk orders, and an overall scarcity of incremental demand across the industry.

However, the stabilizing effect of essential demand has become prominent; demand for R32 refrigerant—driven by supporting applications—has seen steady growth, serving as the primary pillar of market demand. Downstream refrigerant enterprises have maintained routine, on-demand restocking, thereby solidifying the baseline for market transactions. Meanwhile, overseas demand remains sluggish and the growth rate of export orders continues to slow, failing to offset the negative impact of weak domestic demand during the off-season. Consequently, market rebound momentum remains insufficient, resulting in a prolonged pattern of narrow-range fluctuation and correction—characterized by limited upside potential and limited downside risk.

Market Outlook:

Based on an assessment of factors including costs, supply, and demand, the domestic dichloromethane market is expected to maintain a pattern of narrow-range fluctuation with a firm undertone through the latter half of July, with limited overall volatility. On the cost side, methanol prices are likely to face downward pressure after remaining high and may soften slightly, gradually weakening their support for the market. Regarding supply, the industry continues to operate at high capacity with stable output, ensuring ample availability. On the demand side, the market remains dominated by the traditional off-season effect; the fundamental pattern—characterized by a floor provided by essential demand but a lack of incremental growth—is unlikely to change.

Overall market conditions will remain characterized by "support at the bottom and resistance at the top." While there may be minor, alternating fluctuations in the short term as the market corrects, significant one-sided price swings are unlikely; instead, price levels will likely remain relatively stable. A breakout from the current range-bound pattern is only expected once the downstream off-season concludes and end-user demand gradually recovers.

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