SunSirs: Driven by Rising Costs, Dichloromethane Prices Soared Over 35% in March

Overall Trend: A sharp surge followed by a pullback, then a moderate recovery

In March, the domestic dichloromethane market exhibited a typical "rollercoaster" trend, broadly divided into three distinct phases:

Early March: Rapid Rally Phase. Driven by surging prices for key raw materials—methanol and liquid chlorine—and bolstered by strong cost-side support, the market for dichloromethane experienced a sharp and rapid upturn. Prices were pushed up to 3,265 RMB/ton, marking a phase-specific increase of 86.04% and constituting the core period of the month's explosive market surge.

Mid-March: Period of Decline from Highs. After prices surged to elevated levels, downstream buyers and traders became cautious in accepting orders for high-priced inventory, leading to a significant increase in inventory pressure for manufacturers. Compounded by a pullback in liquid chlorine prices and a weakening methanol market, cost support began to erode; consequently, companies were compelled to lower prices in order to reduce inventory. As of March 20, prices had fallen to 2,175 RMB/ton—a decline of approximately 33.38% from their peak.

Late March: A Period of Moderate Recovery. Driven by substantial price surges in methanol and liquid chlorine, cost-side support strengthened once again; coupled with manufacturers' strong resolve to uphold pricing, dichloromethane prices rebounded slightly after bottoming out.

According to the SunSirs Commodity Market Analysis System, as of March 24, the blended bulk price of dichloromethane in the Shandong region stood at 2,385 RMB per ton. Driven by persistent cost-side pressures, market prices surged by 35.9% compared to the beginning of the month; however, weighed down by a supply-demand imbalance, prices fell by 7.38% year-on-year. This trend highlights the core contradiction currently characterizing the market: "strong support from costs, yet significant drag from demand."

Market analysis

Cost Perspective: Raw material fluctuations were severe, driving market trends

Liquid Chlorine: In the Shandong region, the liquid chlorine market surged sharply during the first ten days of the month, fluctuated at a high level during the middle ten days, and subsequently retreated—gradually stabilizing—during the final ten days, exhibiting a pattern of extreme volatility. Its market trajectory was highly synchronized with that of dichloromethane, serving as the critical cost variable that triggered the "rollercoaster" market performance observed in dichloromethane this month. 

Methanol: Influenced by the conflict in the Middle East—which has led to expectations of tightening methanol imports from Iran—domestic methanol market prices have trended upward amidst volatility, thereby driving up production costs. According to data from SunSirs, the price of methanol stood at 3,170 RMB/ton on March 24; this represents a surge of 44.09% compared to early March, providing strong cost-side support for the market recovery observed in dichloromethane during the latter part of the month.

Supply and Demand: Loose supply coexisted with weak demand

Export Disruptions and Inventory Pressure: Due to a sharp decline in export orders from the Middle East—stemming from shipping disruptions, schedule delays, and related issues—goods originally destined for export have been diverted back to the domestic market, resulting in an increase in domestic supply. Concurrently, inventories held by manufacturing enterprises have continued to accumulate, leading to a decline in market trading activity.

Supply: Stable with an Upward Trend. Within the region, some facilities were operating at reduced loads while others were ramping up production; consequently, the overall operating rate remained steady at approximately 80%. As of March 24, as facilities gradually resumed production, market supply was exhibiting a trend of stability accompanied by a slight increase.

Demand Recovery Fell Short of Expectations: Downstream sectors—including refrigerants, pharmaceuticals, and solvents—had not witnessed a significant surge in demand, failing to meet prior market expectations. End-users generally adopted a cautious procurement strategy—buying "on demand" and "just-in-time"—resulting in overall sluggish market trading activity.

Market outlook

Looking ahead to April, the dichloromethane market is expected to maintain a pattern of wide-ranging fluctuations, characterized by an interplay of bullish and bearish factors:

Cost Support Persists, Yet Volatility Risks Remain Significant: Methanol prices are holding at elevated levels—bolstered by expectations of reduced imports—thereby providing a floor of support for the market. However, liquid chlorine serves as a critical variable; should subsequent supply recovery lead to a decline in its price, it would directly undermine the cost-driven support for dichloromethane.

The supply-demand imbalance remains to be alleviated: On the supply side, market availability is ample as production facilities resume operations; on the demand side, close attention must be paid to the inventory stocking pace of downstream industries. Should demand fail to keep pace, the pressure of high inventory levels may compel enterprises to offer price concessions once again.

Cautious Market Sentiment: Following the sharp fluctuations experienced this month, traders and downstream users have adopted a heightened risk-averse stance, resulting in limited speculative demand. In the short term, the market is expected to remain locked in a tug-of-war between cost support and weak demand. Prices are projected to follow a trajectory of intermittent rebounds followed by sideways consolidation; therefore, it is advisable to closely monitor changes in raw material prices and the pace of downstream procurement.

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