Price trend

According to SunSirs, the dichloromethane market exhibited a continuous downward trend and sluggish performance during the first half of August. Lacking substantial positive drivers, trading activity was primarily driven by essential restocking needs, while a strong wait-and-see sentiment prevailed. As of August 14, the mixed price for bulk dichloromethane in the Shandong region stood at 1,945 RMB/ton, marking a 12.39% decline since the beginning of the month.

Analysis of Key Drivers

Supply side: High operating rates and ample supply

The industry's operating rate currently hovers around 80%, with overall supply remaining ample. During the period, the volume of capacity returning to service exceeded that lost to shutdowns, leading to a continued rise in the industry's capacity utilization rate. Inventory levels at some enterprises have continued to build up, creating pressure. Despite significant financial losses, there are currently no clear signs of enterprises reducing operating loads.

Demand side: Lackluster follow-through; driven primarily by essential needs.

Demand from downstream end-user industries has been sluggish, with overall procurement interest from both traders and end-users remaining weak. Market activity is dominated by small-volume orders to meet immediate needs, lacking the sustained, large-scale purchasing required to provide significant price support. A prevailing bearish sentiment across the industry has further dampened the willingness to purchase.

Cost side: Under pressure at high levels; transmission mechanism failing

While the price of the feedstock methanol has stabilized and rebounded, and prices for both methanol and liquid chlorine remain at medium-to-high levels, the price of dichloromethane continues to fall steadily; due to intense oversupply pressure, high costs have not been effectively passed on to dichloromethane prices, placing significant cost pressure on methane chloride producers.

Market Outlook

In the short term, the fundamental imbalance of oversupply in the dichloromethane market is unlikely to reverse. On the supply side, operating rates remain high with no large-scale reductions yet, and inventory continues to face pressure to accumulate; however, given that some enterprises are operating at a loss, forced load reductions could occur if losses widen—a key variable that could drive prices upward. On the demand side, downstream activity remains dominated by small, essential orders; without a surge in demand for refrigerants or a release of export orders, sustained buying support is unlikely to materialize. On the cost side, high prices for methanol and liquid chlorine are providing a floor for spot prices, limiting the scope for any significant decline.

In the short term, the dichloromethane market is expected to fluctuate at low levels; while a slight, momentum-driven dip to new lows cannot be ruled out, the market may see a technical rebound driven by signals of overselling. However, the rebound potential is limited—representing merely a correction from oversold conditions rather than a reversal of the underlying medium-term bearish trend. Key factors to monitor include adjustments to manufacturer quotes, plant maintenance or operating rate reductions, and signs of concentrated restocking by downstream buyers.

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