In the second half of July, the dichloromethane market as a whole shifted from a “sharp rise” to a narrow range of stable and strong fluctuations, with a convergence of volatility. Manufacturers still have the willingness to raise prices, but the follow-up of transactions has slowed down significantly. As of July 30th, the mixed price of dichloromethane in Shandong region was 2220 yuan/ton, an increase of 4.1% compared to the middle of the month.
Core driver analysis
Cost side: support phased, marginal weakening
Geopolitical events drive market sentiment, international oil prices fluctuate, putting pressure on high levels of methanol, making it difficult for spot prices to continue to rise. After imports are cashed in at the port, port inventories have rebounded, and peak season sentiment has cooled down. Currently, the focus of methanol is shifting downwards; Liquid chlorine has shown a strong upward trend, rising from -150 yuan/ton in mid month to 300-500 yuan/ton. On the cost side, it can only establish a price bottom for the dichloromethane market and cannot drive a significant price surge.
Supply side: high production capacity, regional differentiation, overall supply not lacking
The comprehensive construction of the industry remains at a medium to high level of 78% -80%, with no large-scale centralized maintenance; The main equipment in East China is stable, while the load in Southwest China has rebounded. Some equipment in North China has low load, and regional price differences exist but the total amount is loose; Due to the low inventory in the overlapping industry, it is difficult to experience a deep decline, but it is also difficult to form a sustained supply gap.
Demand side: Traditional off-season, only refrigerant is needed to support the bottom
The traditional off-season effect will continue, with weak demand for traditional solvents such as high-temperature coatings, adhesives, and pharmaceutical pesticide intermediates in July. Downstream demand for small orders is high, and long orders are not locked in; R32 refrigerant is the most stable item, providing bottom line demand for stocking and export orders during peak season of air conditioning, sealing off the potential for a sharp decline, but not enough to drive the entire industry chain to actively replenish inventory; The export window generally follows the demand for overseas refrigerants, and there was no significant increase beyond expectations in July.
Market forecast:
The downward shift of the methanol center of gravity on the cost side weakens the support of raw materials, and demand is in the traditional off-season. Downstream solvents such as coatings, pharmaceuticals, and pesticides lack active replenishment power, and only refrigerants are needed to support the bottom. There is a lack of sustained volume growth driven by favorable factors, making it difficult for prices to further increase significantly; Combined with the industry maintaining a medium to high level of production and overall loose supply, it is difficult to form a sustained gap in the supply side, and manufacturers continue to pull up without transaction cooperation. The high price of liquid chlorine has solidified the bottom line of costs; The overall inventory pressure in the industry is not high, and factories still have the willingness to raise prices; R32 refrigerant matching requires stability and can seal deep drop space, with a low probability of significant downward exploration.
It is expected that the short-term dichloromethane market will likely maintain a narrow range of fluctuations, stable to strong operation, and limited upward elasticity.
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