SunSirs: After the Holiday, the Dichloromethane Market Experienced a Weak Downward Trend (May 1-9)

Price trend

After the May Day holiday, the dichloromethane market in Shandong was under pressure and fell. During the holiday, logistics capacity decreased, and enterprise inventory accumulated again. After the holiday, the demand side urgently needed to purchase, and market trading had been sluggish. Manufacturers offered small discounts on shipments, but transactions still showed weakness. According to the monitoring of the commodity market analysis system of SunSirs, as of May 9th, the average price of bulk dichloromethane in Shandong Province was 2,065 RMB/ton, a decrease of 3.95% during the week.

Analysis of influencing factors

Supply side: Local enterprises had lowered loads to stabilize prices, while overall supply remained relatively loose

Device dynamics: Jinling Chemical Industry in Shandong Province was operating at a reduced load, with an overall operating rate fluctuating around 75% and a relatively stable supply.

Enterprise inventory: After the holiday, inventory had accumulated, and some enterprises' inventory had risen to medium to high levels, increasing the pressure on enterprise shipments.  

Cost side: The trend of raw materials was differentiated

Methanol: The fundamentals were weak, and the price of methanol had slightly decreased. As of May 8th, the spot price of methanol in Shandong was quoted at 2,390 RMB/ton, a weekly decline of 2.05%, weakening the cost transmission power. Due to the off-season demand, it is expected that there will be upward pressure on prices.

Liquid chlorine: The price of liquid chlorine in Shandong rose strongly, providing strong support for the cost of dichloromethane.

Demand side: primarily focused on essential procurement

Downstream industries such as refrigerants and pharmaceuticals mainly relied on essential procurement, with low enthusiasm for post holiday purchases and weak market transactions. Traders had a strong wait-and-see attitude, with some low-priced goods circulating, but overall transaction volume was limited.   

Market outlook

In the short term, the dichloromethane market may continue to experience weak fluctuations:

1. Supply pressure: If the enterprise continues to reduce its load and inventory, prices may receive temporary support; Otherwise, high inventory will suppress the rebound space.

2. Cost game: The strong liquid chlorine and weak methanol form a hedge, narrowing the profit margin of enterprises and potentially forcing further production cuts.   

3. Demand recovery: If downstream industries do not concentrate on replenishing inventory, the market will be difficult to change its fatigue. It is expected that prices will remain low and consolidate before the traditional peak demand season in June.

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