Recent Weak Performance of Dichloromethane

December 23 news

Market Overview: (12.16-12.23)

According to the commodity market analysis system, as of December 23, the average price of dichloromethane in bulk in Shandong region was reported at 1,710 CNY/ton, a decrease of 4.47% within the week. Compared to the same period last year, the price decrease reached 39.25%. The imbalance between supply and demand in the market continues to suppress the market trend, causing it to oscillate weakly within a historically low range.

Supply Side: High Operating Rates Are the Main Source of Pressure

The industry maintains high load: The Chinese methyl chloride industry's operating rate remains high, which is the core factor suppressing the market. Although there are sporadic instances of reduced loads, the overall supply situation is not significantly affected.

The strategy focuses on shipping goods: Enterprises generally face inventory pressure and are adopting profit-reducing shipping strategies to ease this pressure.

Demand Side: Weak Domestic Demand, Relying on Exports for Diversion

The main downstream refrigerant R32 provides limited support: its operating rate is decent, at about 80%, but because it is mostly paired with upstream raw materials, the actual purchase volume of commercial dichloromethane is limited. Demand in other sectors is weak: demand in the pharmaceutical and electronics sectors is stable but small in total; the traditional solvent sector is squeezed by both economic prosperity and low-cost alternatives. The purchasing attitude is extremely cautious: downstream players generally adopt a "purchase as needed, replenish inventory in small amounts when prices are low" strategy, and the market lacks speculative and stockpiling demand.

Dichloromethane imports and exports show an extreme divergence: This phenomenon confirms the weakness of domestic demand. Imports: In November, it was only 17.3 tons, a decrease of 15.81% month-over-month, which is negligible, indicating that there is no import demand in the Chinese market. Exports: In November, it reached 23,386.69 tons, an increase of 24.07% month-over-month, becoming a key channel for absorbing China's excess capacity. However, this is a passive choice under weak market conditions, providing only bottom support and unable to drive a market reversal.

Cost Side: Raw material prices fluctuate, squeezing corporate profit margins.

Liquid chlorine: Increased maintenance activities downstream have led to weaker demand and falling prices.

Methanol: Due to port destocking and expectations of reduced imports, prices have rebounded. As of December 23, the benchmark price of methanol in China was 2,140 CNY/ton, an increase of 1.78% during the period.

Although the main raw material, liquid chlorine, has fallen in price, the weak price of dichloromethane has significantly squeezed the profit margins of Chinese production enterprises.

Outlook for the Future:

Short-term negative factors are dominant, and it is expected that the market will continue to operate weakly, with prices possibly continuing to fluctuate and bottom out within a historically low range. Attention needs to be paid to whether there are substantive adjustments on the supply side and changes in inventory. Before a clear production cut driver appears, the market will find it difficult to form a trend of rising momentum.