June 30th News
According to SpotCom: In the second half of June, the dichloromethane market showed a one-sided weak downward trend with a slight decline. In the first half of the month, active reduction in production and plant maintenance provided short-term support. However, demand continued to weaken during the off-season, and exports significantly declined, with goods continuously flowing into the Chinese market. Manufacturers offered discounts to sell, causing the price to steadily decrease. As of June 30, the mixed price of dichloromethane in bulk in Shandong was 1937 CNY/ton, a 6.97% decrease from mid-month.
Core Driver Analysis
Supply side: Minor maintenance reductions, but overall supply remains loose in China
The Dongyue methane chloride plant has been operating at a low load of 50% for an extended period, while Luxi Chemical continues to reduce its output. Dongying Huatai and Jiangsu Liwen conducted short-term maintenance in mid-to-late June and at the end of June, respectively, temporarily reducing the supply available on the market and alleviating the pressure of oversupply. However, the industry’s average operating rate for the month remained high, at 75%-80%, indicating that these temporary reductions did not substantially tighten overall supply. Moreover, on June 15, Binhai New Materials announced a new methane chloride project with an annual capacity of 200,000 tons, to be phased in over two stages, further weighing on spot price expectations due to the anticipated increase in future capacity.
Demand Side: Both domestic and external demand are weak, with the off-season weighing heavily.
Domestic demand is structurally diverging and generally weak: While demand for refrigerant R32 remains stable, most of it is sourced internally by enterprises, limiting the increase in spot purchases from external suppliers and thus failing to drive a significant expansion of the market. Meanwhile, demand in traditional sectors such as pharmaceuticals, solvents, and metal cleaning continues to shrink, influenced by environmental policies and the rise of alternative products, leaving overall domestic demand lacking sufficient support.
Exports have weakened significantly, and diversion channels have become ineffective: In May, exports totaled 13,421 tons, down sharply by 45.32% month-on-month and by 28.45% year-on-year. In June, as Southeast Asia and South America entered the off-season for chemical products, overseas procurement orders plummeted. As a result, previously exported goods began flowing back into China, further intensifying competition in the spot market, forcing manufacturers to lower prices and boost sales volume.
Cost Side: Methanol fluctuates and declines, weakening its support.
In mid to late June, methanol spot prices fell sharply, with the maximum price decrease exceeding 15%. The cost of raw materials also decreased, narrowing the loss margin for production enterprises, and providing manufacturers with ample room to lower prices for sales. In Shandong, the price of liquid chlorine was weak, ranging from -100 to 300 CNY per ton, further lowering the overall production costs and making it more difficult to shift the bottom support upward.
SpotCom Technical Indicator Analysis:
From the analysis of the spot Tong moving average trend signal, the current 10-day moving average of dichloromethane continues to run below the 20-day moving average in China, with the difference expanding negatively, indicating an accelerating downward trend and that the bearish forces are dominating the market.
Looking at the five-stage positioning, multi-cycle positions are all at low levels, effectively limiting the room for a sharp decline. For several consecutive days, alerts for “10-day oversold” and “20-day oversold” have been triggered, indicating that the short-term price decline has been overdrawn. However, this only reflects a temporary, minor technical need for a corrective rebound and does not alter the medium-term bearish structure.
Future Market Forecast:
Market supply and demand dynamics suggest that the dichloromethane market in China will continue to experience a narrow range of fluctuations in the short term, with minor volatility. Some local areas may see a brief rebound due to plant maintenance, but the overall rebound potential is limited.
