In the first half of May, the dichloromethane market in Shandong showed a strong trend of unilateral upward movement and high-level stagnation, with significant gains. As of May 15th, the mixed price of dichloromethane in Shandong region was 2340 yuan/ton, an increase of 14.99% from the beginning of the month.
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Cost side: Price increase leads to cost deviation, and support gradually weakens
This round of market trend presents a typical deviation feature of “price increase, cost decrease”:
Raw material methanol: In the first half of May, the price dropped by over 5%, forming a strong contrast with the 14.99% increase in dichloromethane, indicating that cost is not the core driving force behind this round of price increases.
Liquid chlorine market: With the recovery of operating rates in chlor alkali enterprises, the center of gravity of liquid chlorine prices has slightly shifted downwards, further loosening the cost support for integrated chlor alkali enterprises.
Enterprise profit: Weakening costs and significant price increases have significantly expanded the profit margin of dichloromethane production enterprises, and their willingness to raise prices has increased in stages. However, the support of the cost side for subsequent market trends has significantly weakened.
Supply side: Maintenance+low inventory, short-term tight supply of circulating goods
The phased contraction of the supply side is the core support of this round of market trend:
Equipment maintenance: Some dichloromethane units in Shandong, Jiangsu and other places have entered routine maintenance, causing a temporary decline in industry operating rates and a reduction in market supply.
Low inventory: Social inventory continues to be at a low level in recent years, and there is not much pressure on enterprise inventory. There is a strong sentiment of reluctance to sell and price hikes, coupled with the demand for replenishment from traders, further amplifying price increases.
Mid term outlook: With the resumption of maintenance equipment, it is expected that the industry’s operating rate will gradually rise from late May, and supply side pressure will gradually be released.
Demand side: concentrated release of post holiday demand, high prices suppress transaction sustainability
The demand side presents the characteristics of “short-term concentration and long-term weakness”:
Urgent support: Downstream industries such as refrigerants (R32), coatings, and pharmaceutical intermediates have resumed work after the holiday, and procurement demand has been released in stages, providing basic support for price increases.
High price resistance: With the price rapidly breaking through the 2300 yuan/ton mark, downstream enterprises’ resistance to high prices has significantly increased. Transactions are mainly based on small orders for essential needs, and there is a lack of sustained large-scale procurement, gradually weakening the driving effect on prices.
Segmented fields: The refrigerant industry mainly focuses on supporting procurement, with limited new orders; The demand for traditional coatings and pharmaceuticals is flat, with a slight year-on-year decline and limited support for prices.
Market forecast: High volatility weak, mid-term pressure to fall back
In the first half of May, the dichloromethane market saw a unilateral upward trend of over 14% driven by a temporary imbalance between supply and demand. Although the technical outlook remained bullish, there were signals of weakened upward momentum and short-term super gains. Subsequently, with the release of supply side pressure and the manifestation of the inhibitory effect of high prices on demand, the market is likely to enter a stage of high-level oscillation and weak trend. There is downward pressure on prices in the medium term, and it is necessary to focus on the progress of equipment resumption, fluctuations in raw material prices, and changes in downstream demand.