Introduction: This week, the domestic dimethyl carbonate (DMC) market continued its downward trend, with trading activity remaining subdued. Prices of low-cost inventory sources kept falling, pushing negotiation benchmarks lower and intensifying market pressure. On Thursday, November 12, the DMC price in the Shandong market stood at CNY 4,450/ton, a decline of 11.8 percentage points compared to the price on November 5. Quotations across major markets have entered a downward channel; holders are eager to offer discounts to move inventory, yet downstream buyers remain scarce. Behind this downturn lies a triple squeeze: persistent supply looseness, collapsing cost support, and rigid but weak demand. None of these factors show signs of substantial improvement in the short term.
Supply Side: High Operating Rates and Abundant Inventory
This week, China’s weekly capacity utilization rate for DMC was 68.95%, down 3.82 percentage points from the previous period, as some units underwent shutdowns. However, this slight dip in operating rates has not altered the overall abundance of market supply. Units that had been undergoing maintenance restarted sequentially between late October and early November, keeping spot circulation volumes consistently high. As inventory pressure became more apparent at certain plants, suppliers were forced to proactively offer discounts to alleviate sales resistance. The bearish impact of supply-side dynamics has not weakened despite the minor drop in utilization rates; instead, the buyer’s market has strengthened further amid competitive selling by producers. Traders are also exhibiting risk-averse sentiment, fearing continued price declines, and primarily focusing on liquidating inventory and accelerating sales pace, which further exacerbates liquidity pressure in the spot market.
Cost Side: Sharp Decline in Propylene Oxide Undermines Price Floor
The significant weakening of cost support is the most direct catalyst for this round of price declines. As a key raw material for DMC, propylene oxide (PO) prices have recently softened notably. The domestic PO market continued its pattern of initial rise followed by decline. Near the end of last week, after prices hit relatively low levels, sales improved slightly. Short-term fluctuations in upstream adjustments at certain local units provided some positive sentiment, leading to a rapid and broad rebound over the weekend. However, due to excessive gains, downstream acceptance decreased, and the upward momentum did not permeate the entire market. During this week, participants adopted a wait-and-see approach regarding crude oil trends, while downstream activities remained sluggish. Negotiated prices gradually shifted lower. By mid-week, Shandong ex-factory cash prices reached CNY 11,000/ton, prompting a brief market recovery. However, sharp declines in the primary feedstock, propylene, along with cooling polyether transactions, caused the market to turn bearish again. As of Thursday, November 12, mainstream Shandong ex-factory cash prices settled at CNY 10,700–10,800/ton. With cost support loosening, market sentiment shifted accordingly, opening up room for further price declines and naturally heightening bearish expectations. Simultaneously, falling international crude oil prices triggered a collective correction in the energy and chemicals sector, with related raw materials such as methanol also weakening, further eroding the overall cost floor. Driven by the psychological tendency to "buy when prices rise but not when they fall," the downward signals from the cost side were amplified by the market, pulling negotiation benchmarks lower.
Demand Side: Restocking Limited to Essential Needs, Lacking Incremental Drivers
Current demand weakness is particularly evident in the electrolyte solvent sector, where reduced demand from the lithium battery industry has significantly slowed procurement of DMC. Although the polycarbonate industry maintains basic operations, its acceptance of raw materials remains limited, with most players adopting a "buy-as-needed, small-lot" strategy, failing to generate concentrated restocking momentum. Insufficient terminal orders constrain factories’ willingness to build inventory. Midstream and downstream players show little enthusiasm for purchasing, mostly limiting acquisitions to essential needs and maintaining cautious procurement rhythms.
Outlook: Weakness Persists, Watch for Unit Changes
Considering the supply, cost, and demand sides, the DMC market lacks substantive positive drivers in the short term, and the weak landscape is unlikely to see significant improvement soon. While there are minor fluctuations in individual units on the supply side, the overall abundant spot inventory is sufficient to meet essential consumption, and de-stocking pressure persists at plants. If propylene oxide and methanol continue to trade weakly on the cost side, the bottom support for finished product prices will dynamically shift lower. On the demand side, constrained by both shrinking volumes in electrolyte solvents and traditional downstream weakness, the soft market situation is difficult to reverse.
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