Cost-Driven Dichloromethane Prices Rise Over 35% in March

March 24 news

Overall trend: Initially surging, then retreating, followed by a moderate recovery.

In March, the dichloromethane market in China exhibited a typical "roller coaster" trend, which can be divided into three stages:

Early March: Rapid Surge Period. Influenced by the rise in methanol and liquid chlorine raw materials, the strong push from the cost side led to a sharp increase in dichloromethane prices, pushing them up to 3265 CNY/ton. The price increase for this period was as high as 86.04%, making it the core stage of the month's price surge.

Mid-March: Period of High Price Retraction. After the price surged to a high level, downstream buyers and traders became cautious about purchasing high-priced goods, leading to a significant increase in inventory pressure for Chinese companies. Additionally, with the decline in liquid chlorine prices and weakening methanol prices, cost support began to weaken, forcing companies to lower prices to reduce inventory. By March 20th, the price had fallen to 2175 CNY/ton, a decrease of approximately 33.38% from its peak.

Late March: A period of moderate recovery. As methanol and liquid chlorine prices rise significantly, cost support is once again strengthened, and Chinese companies are highly motivated to maintain prices, leading to a slight rebound in dichloromethane prices after they hit bottom.

According to the commodity market analysis system, as of March 24, the mixed price of dichloromethane in bulk in Shandong region was 2,385 CNY per ton. Driven by continuous cost increases, the price has surged by 35.9% compared to the beginning of the month. However, due to the imbalance between supply and demand, the price has fallen by 7.38% year-on-year, reflecting the core contradiction in the current Chinese market: "strong cost support and significant demand drag."

Cost Aspect: Raw material prices are highly volatile, driving market trends.

Liquid chlorine: In the early part of the month, the liquid chlorine market in Shandong region surged, then fluctuated at a high level in the middle of the month, and finally dropped and gradually stabilized in the latter part of the month, showing a highly volatile trend. Its trend was highly synchronized with the dichloromethane market, being the key cost variable that triggered the "roller coaster" trend of dichloromethane in China this month.

Methanol: Affected by the conflict in the Middle East, expectations for imports from Iran have tightened, causing China's methanol market to fluctuate and rise, which has pushed up production costs. According to data, on March 24, the price of methanol was 3,170 CNY/ton, a surge of 44.09% compared to early March, providing strong cost support for the recovery of dichloromethane prices in the latter part of the month.

Supply and Demand: Loose supply coexists with weak demand.

Export Obstruction and Inventory Pressure: Due to a significant reduction in export orders from the Middle East caused by shipping disruptions and delays, the supply originally intended for export has returned to China, leading to an increase in domestic supply. At the same time, inventories of production enterprises continue to accumulate, and market trading activity has declined.

Supply is stable with a slight increase: Some companies in the region are both reducing and increasing their production loads, with the overall operating rate maintained at around 80%. As facilities gradually resume production, the market supply is showing a trend of stability with a slight increase.

Outlook for the Future:

Looking ahead to April, the dichloromethane market in China is expected to continue a broad fluctuation pattern, with a mix of bullish and bearish factors.

Cost support still exists but with significant volatility risks: Methanol prices remain high due to expectations of reduced imports, providing a bottom support for the market; however, liquid chlorine, as a key variable, could directly weaken the cost-driven momentum of dichloromethane if its supply recovers and prices fall.

Supply-demand contradiction needs to be alleviated: On the supply side, with the resumption of production facilities, there is ample market supply; on the demand side, it is necessary to closely monitor the inventory replenishment pace of downstream industries. If demand does not follow through sufficiently, high inventory pressure may force companies to offer further discounts.

Market Sentiment Cautious: After experiencing significant price fluctuations this month, traders and downstream users in China are showing strong risk-averse sentiment, with limited speculative demand. In the short term, the market will oscillate between cost support and weak demand, and prices are expected to show a phased rebound followed by consolidation. It is recommended to closely monitor changes in raw material prices and the procurement pace of downstream users in China.