$960/ton! DMAc Market Crash: Raw Material Prices Plummet, Triggering Industry Crisis

At present, China's dimethylacetamide (DMAc) market shows a stable situation, however, the low price reflects the pessimistic market sentiment. This pessimism is mainly due to the decline in production costs, which is caused by the fall in the prices of dimethylamine and acetic acid, the main raw materials. In addition, weak demand from the pharmaceutical and construction industries, which are the main downstream industries, further dampened the overall vitality of the DMAc market due to the poor performance of these industries.

In the most recent weeks, that is, as of August 30, the Chinese dimethylacetamide (DMAc) market maintained a low price of 960 US dollars/ton (FOB- Nanjing). Export orders for dimethylacetamide were suppressed and declined due to the deterioration of the external market environment. Although purchasing activity declined in August, the main reason was that Chinese manufacturers maintained adequate inventories of raw materials. At the same time, finished stocks of dimethylacetamide have increased, and the report notes that delays in export shipments have led to the accumulation of stocks after production. Market participants generally believe that the decline in DMAc prices is attributed to lower raw material costs, especially dimethylamine and acetic acid. Therefore, Chinese manufacturers continue to reduce the selling price of dimethylacetamide and offer discounts to maintain market competitiveness. Business confidence in China also declined in August 2024, reflecting the overall market pessimism. The narrowing of the price gap between dimethylamine, acetic acid and DMAc further highlights the continued bearish trend in the market.

China's construction industry is facing major challenges, as evidenced by a 19.7 per cent year-on-year drop in new home sales by China's top 100 real estate companies in July and a 36.4 per cent drop in transactions from June. This downturn has led to reduced demand for commodities, including dimethylacetamide (DMAc), further adding to the bearish sentiment in the market. In response to these challenges, governments in at least 10 cities have relaxed or scrapped new home price guidance to allow market demand to play a bigger role, which is expected to prompt more property companies to lower prices. In addition, China is considering a plan to allow homeowners to refinance up to $5.4 trillion in mortgages in an effort to lower borrowing costs for millions of households and spur consumption. Although lower mortgage rates may affect the profitability of state-owned banks, the measure could bring some relief to the beleaguered real estate sector.

According to ChemAnalyst, the Chinese dimethylacetamide (DMAc) market is expected to remain under pressure, and the bearish market sentiment is likely to persist. This forecast is based on the continued weak performance of the downstream construction and pharmaceutical industries, which is expected to further reduce the demand for dimethylacetamide and exert downward pressure on the market.