Downstream Demand Weak, DMF Market Primarily Operates at a Weak Level

May 26 News

I. Price Trends

According to the commodity market analysis system: As of May 26, the average quotation for premium grade DMF from Chinese enterprises was 5,060 CNY/ton. Over the past week, the Chinese DMF market has shown a weak pattern characterized by an initial decline followed by stability, low-level stagnation, and light trading. Prices have fallen by 12% compared to early May. The market is under significant pressure due to a loose supply and demand situation and weak cost support.

II. Cause Analysis

Market Supply: This week, the DMF market supply is loose, with high production levels and inventory accumulation, putting continuous pressure on prices. Regional price wars have intensified, with the industry's operating rate remaining above 75%. Previously shut-down facilities have resumed production, and major plants in Guizhou and Anyang are operating normally. The volume of available spot goods in the market continues to increase, with a significant rise in supply.

Raw Material Costs: The core production costs of DMF are primarily composed of methanol and liquid ammonia. This week, raw material prices remained weak, providing insufficient support for DMF prices and creating room for market price reductions. Methanol prices fluctuated at lower levels throughout the week—rising initially before falling—and averaged around 2,150 CNY per ton, showing a year-on-year decline. The downward trend in methanol prices directly lowered DMF production costs, giving manufacturers ample room to cut prices and significantly weakening their willingness to hold prices steady. As for liquid ammonia, prices remained stable with narrow fluctuations, showing no significant upward or downward movement. While this kept cost pressures from escalating further, it also failed to provide any meaningful support. Industry profits: With DMF prices continuing to fall, corporate profits have markedly contracted. Some small-scale producers in northern regions have even fallen into losses, forcing them to reduce production or halt operations—but the overall impact on the cost structure remains limited. Overall, the cost floor provides insufficient protection for current prices, making the market more prone to declines than to increases.

Downstream Demand: Core downstream industries are experiencing weak demand, with insufficient end-customer orders. Downstream enterprises continue to adopt a strategy of "low inventory and on-demand procurement," resulting in predominantly small-scale transactions in the market and a lack of large-scale orders to provide solid support. Plant operating rates remain steady at 70%–75%. However, the end-use nylon and synthetic fiber industries are in the off-season, facing inadequate order volumes; rigid demand remains stable with no incremental growth, and companies are only making small, on-demand purchases. Consequently, demand for cyclohexane remains limited. In the solvent industry, constrained by environmental regulations, some enterprises have shifted to alternative products, leading to continued contraction in demand and subdued purchasing intentions. Demand from sectors such as electronics and coatings remains tepid, showing no clear signs of recovery, making it difficult to provide effective support. Downstream businesses are adopting a wait-and-see attitude, resisting higher prices, and bulk transactions are rare, keeping market activity at a low level. Overall, downstream demand remains weak, making it challenging to absorb the ample supply.

III. Future Market Forecast

DMF analysts believe: In the short term, DMF prices will mainly show a narrow and weak trend. The situation of oversupply in the market is unlikely to ease in the short term, with general downstream demand, insufficient momentum for price increases, inadequate terminal order demand, and a significant contraction in profits.