SunSirs: The Center of the Dichloromethane Market Shifted Upwards

Price trend

At the beginning of the week, market news showed that due to equipment failures and maintenance by some companies, the supply in the Shandong market was tight, inventory was not under pressure, and enterprise offers were stable. The dichloromethane market slightly increased, but downstream demand did not improve. Coupled with the previous equipment load reduction and enterprise load increase, supply and demand were deadlocked, and the market remained stable with an upward trend. According to the monitoring of the commodity market analysis system of SunSirs, as of July 7th, the average price of bulk dichloromethane in Shandong Province was 2,217 RMB/ton, with a weekly increase of 5.09% and a year-on-year decrease of 8.77%.   

Analysis of influencing factors

Supply side: Supported by favorable factors of devices shutdown and load reduction

Device dynamics: The overall industry production fell to around 80%, and supply was becoming tight. According to market news, due to equipment failure, Luxi methane chloride was temporarily operating at low load, providing support for the market; Dongying Huatai equipment was restored, Dongyue drove 80%, and Jiangxi Liwen opened 3 sets of equipment.

Inventory pressure: low-priced enterprises had better destocking at the end of last month, coupled with a decrease in supply, the on-site inventory was still acceptable.

Cost side: The prices of methanol and liquid chlorine continued to weaken, and the cost support for dichloromethane was insufficient

Methanol: Due to maintenance in mainland China and a decrease in arrivals at ports, the demand for olefins at ports had decreased. The traditional off-season demand led to a fluctuating downward trend in the methanol market. As of July 7th, the benchmark price of methanol in SunSirs was 2,447.50 RMB/ton, a decrease of 12.75% during the week.

Liquid chlorine: Due to low supply and demand in the Shandong market, the price of liquid chlorine had fallen sharply.   

Demand side: Traditional downstream industries were suppressed by seasonal factors, resulting in weak purchasing intentions

Dichloromethane is widely used in the fields of refrigerants, pharmaceuticals, coatings, adhesives, electronic cleaning, etc., and is often purchased at low prices and in high demand. Part of the downstream (coatings, adhesives) were affected by high temperatures, rainy seasons, and environmental inspections, resulting in a decrease in operating rates and weak demand.

The refrigerant was still in the peak demand season, and R32 was basically producing at full capacity, with a significant increase in stability. Although the peak season for refrigerants supported some demand, the increase in external procurement was limited due to the high proportion of self-produced refrigerants and quota restrictions. If there is no significant improvement in terminal consumption, weak demand may suppress the continuous rise of price.

Future outlook:

It is expected that the dichloromethane market will maintain a volatile and stronger trend in the short term, but the upward space may be constrained by demand. Suggest paying attention to device dynamics, inventory changes, and downstream order follow-up.

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