SunSirs: Dichloromethane Market Bottomed Out and Stabilized, Supply Contraction Drove a Mild Recovery

Price trend

The Shandong dichloromethane market faced a tight supply and weak demand, leading to cautious transactions and a wait-and-see approach. Companies continued to offer discounts and reduced inventory, pushing the market down to a bottom. According to the SunSirs Commodity Market Analysis System, as of September 17, the average bulk price of dichloromethane in Shandong was 1,845 RMB/ton, a 4.9% decrease over the previous period and a 33.63% year-on-year plunge, reaching a nine-year low. As of September 17, supply-side operating rates had decreased, companies were reducing production costs to stabilize prices, and exports were continuing to increase. This had eased market supply pressures and stabilized prices.

Analysis of Influencing Factors

Supply side: Supply contracted, reduced loads to stabilize prices

The industry's methane chloride plant operating rate had been reduced from a high of 85%, with the Dongying Huatai unit operating at 50%. Companies faced high inventory pressure and had previously offered discounts to boost shipments. As of September 17, they were mitigating supply pressures by reducing operating rates, strengthening their willingness to stabilize prices.

Costs: Overall stability with minor fluctuations, supported by cost support

As for methanol, the raw material market saw a slight price increase, buoyed by the peak September and October shopping season. As of September 17th, the benchmark price for methanol on SunSirs was 2,286.67 RMB/ton, a 0.66% increase over the previous period. However, supply from mainland plants continued to increase, and imports to ports remained high. Downstream plant maintenance was weakening demand, leading to a continued rise in overall inventories, which had reached record highs, suppressing upward potential. Liquid chlorine shipments were struggling, leading to a slight price decrease in Shandong Province, maintaining a stable but weak overall cost base.

Demand side: domestic demand was weak, foreign demand was strong

In terms of domestic demand: the main downstream refrigerant industry was subject to quota constraints, and demand was rigid but there was no significant increase; the pharmaceutical, chemical synthesis and other fields had recovered moderately, and the adhesives, coatings and other industries hadbeen affected by the downturn in the real estate market and were still mainly based on small-scale purchases for just-in-time needs.

In terms of exports: continued strong performance, with exports to Southeast Asia, the Middle East and other places increasing. Export inquiries and ship scheduling in September remained active, effectively alleviating domestic supply pressure.

Market outlook: There may be a slight recovery in the short term, but the rebound will be limited

With companies undergoing maintenance and reducing loads, and exports remaining strong, the market supply and demand structure is improving marginally, and prices have room to rise slightly. However, due to the limited recovery in domestic demand and weak cost support, the market lacks the momentum for a significant increase and is expected to fluctuate with a slight upward trend.

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