SunSirs: Under the Drag of Supply and Demand, Dichloromethane Plummeted Sharply

Price trend

According to SunSirs, during the latter half of April, the domestic dichloromethane market experienced a precipitous decline, subsequently oscillating within a narrow range at a low level. As of April 29, the blended bulk price of dichloromethane in the Shandong region stood at 2,035 RMB/ton, representing a decrease of 17.19% compared to the beginning of the month.

Fundamental Analysis

Cost Side: The cost inversion had intensified, placing dichloromethane under pressure

With tensions in the Middle East showing no signs of easing, the supply of imported goods remained tight. Methanol prices, after a moderate decline, had stabilized and begun to rebound; consequently, a sharp drop in prices was unlikely. Liquid chlorine continued to fluctuate at high levels, reflecting a strong determination among manufacturers to hold firm on pricing. Although raw material costs retreated slightly, they remained generally robust. In stark contrast, the price of dichloromethane had plummeted—a collapse that had directly and significantly widened the negative margin between production costs and selling prices for manufacturers. The primary driver behind this downturn was a passive strategy of price cuts aimed at inventory reduction, necessitated by an internal supply-demand imbalance characterized by high operating rates, elevated inventory levels, and weak market demand.

Demand Side: Domestic demand was sluggish, exports faced headwinds, and high prices were dampening transaction volumes

Weak Domestic Demand: While essential demand for refrigerants and pharmaceutical intermediates remained stable, downstream sectors—particularly small and medium-sized enterprises in areas such as sponges, coatings, and adhesives—were facing a shortage of orders. Amidst high prices, buyers were exercising caution, primarily adopting a "purchase-as-needed" strategy.

Export Obstacles: The buoyancy of export markets had receded from its recent highs. In March 2026, dichloromethane exports totaled 15,705.94 tons—a 19% increase month-on-month but a 32% decrease year-on-year. Ongoing shipping disruptions in the Middle East continued to impact export orders; compounded by high price levels, the capacity to divert domestic supply to export markets had diminished, thereby further exacerbating the imbalance between supply and demand within the domestic market. As these shipping issues are unlikely to be resolved in the short term, significant growth in export volumes remains improbable.

Supply Side: High Operating Rates + Inventory Accumulation — Significant Pressure on Shipments

Operating Rates: The industry maintained a high operating rate of approximately 80%; with the release of new production capacity from Henan Jinhai, supply conditions remained consistently ample. Inventory: In the first half of the month, price cuts aimed at reducing inventory yielded limited results; by the middle to latter half of the month, corporate inventory levels rebounded to moderate-to-high levels, and shipment pressures compelled companies to resort to price cuts and promotional sales. Amidst financial losses, companies found it difficult to implement substantial production cuts; consequently, inventory levels remained elevated in early May, and traders' increased eagerness to offload stock served to cap any potential upside in prices.

Market outlook

Dichloromethane is temporarily oscillating at a low level in the short term, with upside potential limited while downside risks are cushioned. Bolstered by strong cost-side support yet constrained by weak demand—and facing high pressure from supply—the market exhibits a state of "weak equilibrium," characterized by an inability to sustain upward momentum and limited room for further decline.

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