SunSirs: Dichloromethane Prices Surged Over 14% in Half a Month

According to SunSirs’ data: During the first half of May, the dichloromethane market in Shandong province exhibited a strong trend characterized by a unilateral upward trajectory followed by a plateau at a high level, with significant price increases. As of May 15, the blended spot price for bulk dichloromethane in the Shandong region stood at 2,340 RMB/ton, representing a 14.99% increase compared to the beginning of the month.

Core Drivers Analysis

Cost Side: Price Rises Diverged from Costs; Support Gradually Weakened

This round of market movement exhibited the classic divergent pattern of "rising prices amidst falling costs":

Methanol Feedstock: Prices fell by over 5% during the first half of May—a stark contrast to the 14.99% surge in dichloromethane prices—indicating that production costs were not the primary driver behind this latest round of price increases.

Liquid Chlorine Market: As operating rates at chlor-alkali facilities rebounded, the price level for liquid chlorine drifted slightly lower; consequently, cost support for integrated chlor-alkali producers has further weakened.

Corporate Profits: Driven by softening costs coupled with surging market prices, profit margins for dichloromethane manufacturers have expanded significantly. This has temporarily bolstered their resolve to maintain high pricing levels; however, cost-side factors now offer markedly diminished support for future market trends.

Supply Side: Maintenance + Low Inventory — Short-term Availability of Circulating Goods Was Tight

The temporary contraction on the supply side served as the core support for this round of market rally.

Plant Maintenance: Several dichloromethane production units in regions such as Shandong and Jiangsu have entered scheduled maintenance periods. Consequently, the industry's operating rate has experienced a temporary decline, leading to a reduction in market supply availability.

Low Inventory Levels: Social inventory levels remain consistently at multi-year lows, placing minimal inventory pressure on manufacturers. This situation has fostered strong market sentiment characterized by a reluctance to sell and a determination to hold up prices; coupled with restocking demand from traders, these factors have further amplified the magnitude of price increases.

Medium-Term Outlook: As the units currently under maintenance gradually resume production, the industry's operating rate is expected to begin a gradual recovery starting in late May, at which point supply-side pressures are anticipated to begin easing.

Demand Side: Post-Holiday Release of Pent-Up Demand; High Prices Dampened Transaction Sustainability

The demand side exhibited a pattern characterized by "short-term concentration, but long-term weakness":

Support from Essential Demand: Following the holiday period, downstream sectors—including refrigerants (specifically R32), coatings, and pharmaceutical intermediates—resumed operations en masse. This led to a phased release of procurement demand, providing a fundamental basis for price appreciation.

Resistance to High Prices: As prices rapidly breached the 2,300 RMB/ton threshold, downstream enterprises exhibited significantly heightened resistance to the elevated costs. Transaction activity was dominated by small-volume orders driven solely by essential needs; the absence of large-scale, sustained procurement orders meant that the upward momentum driving prices gradually began to wane.

Sector-Specific Dynamics: Within the refrigerant sector, procurement activity was primarily driven by ancillary requirements, with limited volume in terms of new orders. Meanwhile, demand in the traditional coatings and pharmaceutical industries remained lackluster—registering a slight year-on-year decline—thereby offering only limited support to price levels.

Market Outlook: High-level consolidation with a downward bias; medium-term pressure to drive a pullback.

During the first half of May, the dichloromethane market experienced a unilateral upward surge of over 14%, driven by a temporary imbalance between supply and demand; however, signals indicating waning upward momentum and short-term overextension have already emerged. Moving forward—as supply-side pressures ease and the dampening effect of high prices on demand becomes apparent—the market is highly likely to enter a phase of high-level volatility with a downward bias. In the medium term, prices face downward pressure; therefore, key factors to monitor include the progress of plant restarts, fluctuations in raw material prices, and changes in downstream demand.

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