Lead: This week, the domestic dichloromethane market ended its earlier upward trend and entered a phase of post-rise consolidation. Quotations diverged by region and fluctuated flexibly, with the industry exhibiting a typical pattern of long-short tug-of-war. Producers adjusted prices based on their own shipment pace, inventory levels, and regional differences. Overall market trading slowed, with insufficient momentum in either direction. The cost side and supply side provided solid support, while persistently weak demand dragged on price advancement, with bullish and bearish factors counterbalancing each other. As of the time of writing, the average weekly price of dichloromethane in the main producing region of Shandong stood at 2,200 yuan/ton, up 1.85% from the previous week.
Strong cost-side support was the core factor underpinning the market's resilience and preventing a deeper decline this week. Although the price of feedstock methanol pulled back during the period, it remained at a relatively high level. Feedstock liquid chlorine surged by a wide margin to 500 yuan/ton. The production cost of domestic chlorinated methanes this cycle reached 2,076 yuan/ton, up 281 yuan/ton or 15.65% from the previous cycle. Industry cost pressure rose significantly, pushing profits from near breakeven to heavy losses. During this period, the average weekly profit for chlorinated methanes stood at -326 yuan/ton, down 356 yuan/ton from the previous cycle, a decline of 1,186.67%. Against the backdrop of linked raw material price increases and severe losses among chlorinated methane producers, manufacturers generally showed a strong willingness to hold or stabilize prices.
The supply side remained broadly manageable, with limited inventory pressure within regions, further consolidating the market fundamentals. This week, the domestic dichloromethane industry operating rate edged higher, and overall supply capacity was released modestly, yet no excessive inventory build-up pressure emerged in the market. Chlorinated methane output during the period totaled 70,800 tons, up 0.57% from the previous week, with a capacity utilization rate of 79.03%, up 0.41 percentage points from the prior cycle. Constrained by poor sales of the co-product chloroform, some producers adjusted their production ratios.
However, persistently weak demand remained the core bearish factor restraining dichloromethane price trends. At present, the main downstream demand for domestic dichloromethane continues to come from the refrigerant sector, of which the key downstream refrigerant R32 industry has long operated at a low load of around 40%, with overall capacity release insufficient. Additionally, July coincides with the industry's traditional off-season, as downstream end-user plants have successively entered adjusted work-rest schedules, and overall production planning continues to shrink. Refrigerant producers have generally adopted a conservative operating strategy of controlling volumes to support prices, leading to a substantial contraction in feedstock procurement demand. Moreover, following the earlier round of price increases, downstream users and intermediate traders have focused on consuming previously accumulated inventory. Procurement sentiment was extremely cautious, with market participants largely adopting a hand-to-mouth, small-lot replenishment approach. Overall market transactions were subdued, with limited follow-through from just-in-time demand, dragging on the dichloromethane market from the downstream upward.
In summary, under the current chlorinated methanes overcapacity landscape, supply-demand dynamics remain the primary tone influencing price adjustments. However, given the severe losses, cost-side influence has grown stronger. Yet demand strength remains mediocre, and substantive support from end-users is lackluster. Amid the fierce long-short tug-of-war, the domestic dichloromethane market is expected to undergo range-bound consolidation with relatively limited overall movement. Going forward, close attention should be paid to the impact of high costs and the effect of poor chloroform co-product sales on plant operations.
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