Introduction: Recently, the domestic dimethyl carbonate (DMC) market has exhibited a delicate balance. Although this period falls within the traditional off-season for chemical consumption, the market has not shown a one-way downward trend. Instead, it is finding a new equilibrium between supply-side contraction and demand-side weakness, characterized by narrow consolidation and localized softness.
Supply Side: Concentrated Plant Turnarounds, Tightening Regional Supply
The supply side has been the primary supporting factor for the market during this period. Due to the concentrated maintenance shutdowns of several units, the overall capacity utilization rate of the DMC industry has further declined. According to statistics from chempricehub.com, as of June 18, the weekly capacity utilization rate of domestic DMC dropped to 56.11%, down 1.22 percentage points week-on-week. Multiple plants are currently in a shutdown state.
The phased contraction in supply has directly led to a tightening of spot circulation in major production areas. Some plants are fulfilling orders on a scheduled basis, and producers are showing a clear reluctance to sell at low prices, with quotations exhibiting a certain degree of downside resilience. However, due to the generally moderate pace of inventory digestion, the overall inventory pressure at plants remains manageable, with no significant supply gap emerging. This has, to some extent, limited the upside for prices.
Demand Side: Underpinned by Essential Needs, Limited Incremental Growth
Demand-side performance has been relatively weak. The domestic market continues to be subdued, with downstream and end-user companies generally showing low enthusiasm for procurement. Looking at the major downstream sectors: although the capacity utilization rate of the polycarbonate industry remains relatively high, order growth for terminal applications such as home appliances and automotive lightweighting has slowed. Corporate procurement strategies are extremely cautious, characterized by small-volume purchases at lower prices, with a notable lack of bulk buying interest. In traditional solvent sectors like coatings, adhesives, and agrochemicals, which are affected by the off-season for chemical consumption, demand provides only basic essential support, offering no incremental flexibility.
Most midstream and downstream users are only maintaining procurement for essential needs, with a cautious operating mindset and weak willingness to build up inventory. Overall, actual transaction volumes are limited. However, it is worth noting that the concentrated delivery of previously-booked export orders by individual plants has provided some support to market sentiment, leading certain traders to hold a cautiously optimistic outlook for the later period.
Cost Side: Declining Feedstocks, Slight Profit Improvement
The cost side represents another important factor for market prices during this period. Both upstream feedstocks, propylene oxide (PO) and methanol, have posted declines, with PO experiencing a more significant drop. The price decline for DMC has been notably milder than that of its feedstocks, leading to a rebound in industry profitability. The profit for the PO transesterification process increased sequentially due to the weakening price of propylene oxide.
Outlook: Near-Term Stalemate, Focus on Plant Dynamics
In summary, the current DMC market is caught in a "dual squeeze" of relatively high costs and weak demand. In the short term, it is expected that plants currently under maintenance will not resume operations fully, keeping supply pressure low and producers somewhat reluctant to sell. However, there are no clear signs of improvement in downstream demand, with offtake mainly limited to essential needs. The market lacks sustained upward momentum going forward.
Key areas to monitor include the restart progress of plants such as those at Tongling, Anhui and Ningbo Dafa, as well as the start-up schedules of large facilities at Shandong Lihuayi and Shandong Depu in July. Additionally, the price trends for upstream feedstocks—propylene oxide and methanol—will be crucial. If plants gradually resume operations, the supply-side support will be weakened, and the market could return to a weak and volatile pattern. Conversely, if restarts are delayed or new maintenance plans emerge, the market may continue to find support. In the short term, the domestic DMC market is likely to maintain a stalemate of narrow adjustments and range-bound fluctuations, with limited room for significant moves in either direction.
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