SunSirs: Dichloromethane Market: Stable at First, Then Collapsing

Price Trend

According to monitoring data from SunSirs, during the latter half of May, the dichloromethane market in Shandong exhibited a pattern of rising initially before retreating, characterized by weak consolidation. In the first half of the month, prices surged by over 14%, driven by factors such as plant maintenance and a temporary decline in operating rates. However, as the month progressed into its second half, the market gradually shifted into a weak trend; this shift was driven by the resumption of production at various facilities—leading to expectations of increased supply—and compounded by strong resistance among downstream sectors toward high prices. Consequently, trading activity cooled, and manufacturers demonstrated an increased eagerness to offload inventory.

As of May 29, the blended bulk price of dichloromethane in the Shandong region stood at 2,175 RMB/ton, down 7.05% from mid-month levels.

Core Driver Analysis

Supply Side: Shifting from Tight to Loose; Pressure Concentrated in Release

During the first half of May, maintenance shutdowns were concentrated, resulting in low operating rates; consequently, tight supply pushed prices up to elevated levels. In the latter half of the month, facilities undergoing maintenance gradually resumed production, driving operating rates back up to over 80%. The volume of available supply in the market increased rapidly, yet demand failed to keep pace—stifled by the high prices—and this supply-demand imbalance directly triggered a price correction. Manufacturers subsequently offered price concessions to facilitate sales, further driving market prices downward.

Cost Side: Cost support shifts from "weak" to "non-existent."

Some liquid chlorine producers are facing pressure to move inventory, leading to price reductions and a downward shift in the overall price level during the reporting period. The methanol market has transitioned from a strong to a weaker trajectory; previously, the market had reached a high-level stalemate where rising production costs could not effectively be passed on, and downstream sectors exhibited strong resistance to elevated prices. The subsequent retreat in methanol prices—coupled with the decline in the liquid chlorine market—directly opened the door for a downturn in dichloromethane prices. The cost-related pressure on enterprises to lower prices for sales has significantly eased; this factor, combined with increased supply and sluggish demand, has made a price decline all but inevitable.

Demand Side: Driven Primarily by Essential Needs; Resistance to High Prices

Downstream sectors—including refrigerants, pharmaceuticals, and coatings—are currently limiting their purchasing to essential requirements only. Market activity is characterized predominantly by small-volume orders and a "wait-and-see" attitude, lacking the support of substantial large-scale orders. Influenced by environmental regulations and the shift toward eco-friendly alternatives, demand from traditional sectors such as coatings remains persistently weak; while demand from the pharmaceutical sector remains relatively stable, it is insufficient to offset the overall weakness of the broader demand landscape.

Market outlook

As maintenance-idled production units gradually resume operations, supply-side pressure is gradually easing. Elevated prices are dampening the enthusiasm of downstream buyers, resulting in insufficient follow-through in demand. With cost-side support weakening, the dichloromethane market is expected to exhibit a weak, fluctuating trend in the short term. Market participants should closely monitor raw material price trends as well as the actual progress of production unit restarts.

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