Introduction: Recently, the supportive factors for the dichloromethane (DCM) industry have faded, leading to a significant decline in domestic DCM prices. Some companies reduced their quoted prices by 200 yuan/ton in a single day, as the market's dominant drivers returned to supply and demand fundamentals. This price drop was the result of three combined pressures: cooling macro-market sentiment leading to lower costs, increased operating rates among producers, and weak downstream terminal demand. Consequently, DCM prices have reverted to rational levels. As of October 22, the DCM price in Shandong stood at 2,800 yuan/ton, down 600 yuan/ton from the peak of this price increase cycle, representing a decline of 17.65%.
The core logic driving this market cycle has shifted from cost-led dynamics to those driven by supply and demand fundamentals. Prices of upstream raw materials, methanol and liquid chlorine, fell simultaneously, reducing cost pressures for chloromethane producers and significantly weakening cost support. With industry profitability recovering, production enterprises increased their willingness to operate, raising overall load rates to around 70%, resulting in a loose supply side. Furthermore, after DCM prices surged to high levels, downstream users and traders showed insufficient enthusiasm for purchasing. Market transactions were primarily limited to small orders based on rigid demand, with a prevailing wait-and-see attitude toward further declines.
During this period, upstream methanol prices fell due to a lack of demand support. In the liquid chlorine sector, cyclopropane plants in Binzhou temporarily halted procurement, leading to an overall reduction in downstream purchases and consecutive price drops. With both major raw materials for chloromethanes declining in price, industry cost pressure decreased significantly. According to calculations by Chempricehub, the weekly average cost of chloromethanes during this period was 2,514 yuan/ton, a decrease of 235 yuan/ton from the previous period, or 8.55%. The weekly average profit rose to 296 yuan/ton, an increase of 240 yuan/ton compared to the previous period, marking a surge of 428.57%. Following this recovery in industry profits, production enthusiasm improved, driving up operating rates and leading to a loosening of the supply side.
Domestic chloromethane supply increased noticeably compared to the previous period, with rising loads from newly added capacity leading to greater output volumes. Production of chloromethanes reached 63,600 tons this period, a week-on-week increase of 5.47%; the capacity utilization rate was 68.32%, up 0.97 percentage points from the previous period. With increased supply, enterprise inventory pressures gradually mounted, prompting companies to flexibly adjust their quotes based on their shipment status and inventory levels.
The overall industry operating load for the main downstream product, refrigerant R32, remained near 40%. Recently, factory scheduling and consumption forces contracted further, and export volumes declined. With fluororefrigerant R32 prices hovering at high levels, channel holders sought opportunities to sell off inventory, showing little intent to purchase high-cost sources while waiting for clear pricing signals from mainstream large-scale manufacturers. Other downstream sectors, including coatings, adhesives, pharmaceutical intermediates, and cleaning solvents, lacked follow-through momentum. A strong fear of falling prices pervaded the industry, with most participants adopting a "buy-as-needed" approach to avoid stockpiling risks, making it difficult to achieve volume transactions.
In summary, the supply side is expected to remain loose, with enterprises likely continuing to prioritize shipments. Although purchases by downstream users and traders saw some increase, there were no large-scale stockpiling activities. Given the weak supply-demand balance, the domestic DCM market is expected to retain some downward potential, requiring close attention to future news and market developments.
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