High Inventory Levels Put Pressure on DMF Market

May 27 News:

I. Price Trends

According to the commodity market analysis system, as of May 27, the average price of top-grade DMF from Chinese enterprises is 4,920 CNY per ton. Currently, the DMF market's operating rate is stable, and the demand side is also stable, with the overall market mainly running in a consolidation phase.

II. Cause Analysis

Market Supply: Currently, the DMF market supply in China is loose, with high load on facilities and inventory accumulation. High production coupled with inventory buildup continues to put pressure on prices. Regional price wars are intensifying, with operating rates remaining above 75%. Previously shut-down facilities have resumed production, and major plants in Guizhou and Anyang are operating normally. However, downstream demand is insufficient.

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, leaving manufacturers with 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 plants 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 and sluggish overall demand. Purchasing behavior is cautious, and market transactions are dominated by small orders, lacking the support of large-scale deals. Plant operating rates remain steady at 70%-75%. However, the end-use nylon and synthetic fiber industries are in the off-season, facing a shortage of orders; rigid demand remains stable with no incremental growth, and companies are only making small, on-demand purchases, thus providing limited impetus to cyclohexane demand. 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 and struggling to provide effective support. Downstream markets are characterized by strong wait-and-see attitudes, resistance to high prices, and rare bulk transactions, resulting in low market activity. Overall, downstream demand remains weak, making it difficult to absorb the ample supply.

3. 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 difficult to alleviate in the short term, with high inventory levels and a cold downstream purchasing atmosphere.