1、 Price trend
As of May 26th, the average price quoted by domestic high-quality DMF enterprises was 5060 yuan/ton. In the past week, the domestic DMF market has shown a weak pattern of first falling and then stabilizing, with low levels of stagnation and light transactions. The price has dropped by 12% compared to early May, and the overall pressure on the market is obvious due to loose supply and demand combined with weak cost support.
2、 Cause analysis
Market supply: High production levels, inventory backlog, and prominent supply pressure. This week, the DMF market supply was loose, and high production levels combined with inventory accumulation continued to exert pressure on prices. The regional price war intensified, and the production rate remained high, with the industry operating at a rate of over 75%. Early maintenance facilities resumed production, and major facilities such as Guizhou and Anyang were operating normally. The market spot circulation continued to increase, and the supply side increment was significant.
Raw material cost: The core production cost of DMF is composed of methanol and liquid ammonia. This week, the weak operation of raw material prices has insufficient support for DMF prices, providing space for market price reduction. Methanol: fluctuated at a low level during the week, first rising and then falling, with an average price of about 2150 yuan/ton, which weakened year-on-year. The decline in methanol prices directly lowers the production cost of DMF, leaving ample room for manufacturers to lower prices and significantly reducing their willingness to raise prices. Liquid ammonia: prices fluctuate steadily and narrowly, with no significant fluctuations, and there is no additional pressure on the cost side, but no support has been formed. Industry profits: DMF prices continue to decline, and enterprise profits have significantly shrunk. Some small factories in the north have suffered losses and are forced to reduce production or shut down, but the impact on the overall cost pattern is limited. Overall, the cost line lacks sufficient protection against current prices, and the market is prone to falling but difficult to rise.
Downstream demand: Downstream core industries have weak demand, insufficient terminal orders, and downstream enterprises adhere to the strategy of “low inventory, on-demand procurement”. Market transactions are mainly small orders, lacking support from large orders, and the operating rate remains at 70% -75%. However, the terminal nylon and chemical fiber industries are in the off-season, with insufficient orders and stable demand without increment. They only purchase small orders according to demand, which has limited driving force for cyclohexane demand. The solvent industry: constrained by environmental policies, some enterprises turn to substitute products, demand continues to shrink, procurement willingness is low, and demand in industries such as electronics and coatings is flat, with no obvious signs of recovery, making it difficult to form effective support. Downstream wait-and-see sentiment is strong, resistance to high prices, rare bulk transactions, and low market activity. The overall demand side is weak and difficult to eliminate, leading to loose supply.
3、 Future forecast
DMF analysts from Shengyi Society believe that in the short term, DMF prices will mainly operate in a narrow and weak range, and the situation of oversupply in the market is difficult to alleviate in the short term. Downstream demand is average, the driving force for price increases is insufficient, and the demand for terminal orders is insufficient, resulting in a significant contraction in profits.
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