In the first half of August, the overall dichloromethane market showed a pattern of continuous decline and weak operation. The market lacks substantial positive support, and trading is mainly focused on replenishing stocks for essential needs, with a strong wait-and-see sentiment. As of August 14th, the mixed price of dichloromethane in Shandong region was 1945 yuan/ton, a decrease of 12.39% from the beginning of the month.
Core driver analysis
Supply side: High operating capacity, sufficient supply of goods
The current industry operating load remains around 80%, and the overall performance of the supply side is loose. During the cycle, the amount of device recovery exceeds the amount of loss, and the industry’s capacity utilization rate continues to rise. Some companies continue to accumulate inventory, and inventory pressure is evident. Although the company has suffered severe losses, there have been no obvious signs of load reduction in the near future.
On the demand side: weak follow-up, prioritizing urgent needs
The demand performance of downstream terminal industries is poor, and the overall demand for traders and terminal procurement is weak. On site trading is mainly based on small orders for essential needs, lacking sustained large-scale procurement, which has limited support for prices. The strong bearish sentiment in the industry further suppresses purchasing intentions.
Cost side: High pressure, conduction failure
Raw material methanol has stabilized and rebounded, with methanol and liquid chlorine prices operating at medium to high levels. However, dichloromethane continues to decline unilaterally. Due to greater pressure from oversupply, high costs have not been effectively transmitted to dichloromethane prices, resulting in heavy cost pressure for methane chloride enterprises.
Market forecast:
In the short term, the fundamental pattern of oversupply of dichloromethane is difficult to reverse. On the supply side, there has not been a large-scale reduction in inventory in the high opening industry, and there is still accumulated pressure on inventory. In the context of some companies’ losses, if the losses continue to increase, it is not ruled out that passive load reduction may occur in the later stage, which is the main upward variable in the market. On the demand side, downstream demand is still dominated by rigid small orders. Without the concentrated release of refrigerant and export orders, it is difficult to form sustained buying support. The high operation of methanol and liquid chlorine on the cost side has formed a bottom support for spot prices, compressing the potential for significant deep declines.
It is expected that the short-term dichloromethane market will mainly fluctuate at a low level, and it is not ruled out that inertia will slightly bottom out. Under the catalysis of oversold signals, there is a technical opportunity for recovery and rebound. However, the rebound height is limited and belongs to oversold recovery, making it difficult to reverse the medium-term weak pattern. The focus is on manufacturer quotation adjustment, device maintenance and load reduction, and downstream centralized replenishment signals.
| http://www.pva-china.net |