Supply Exceeds Demand, Dimethyl Carbonate Price Declines

Price Trend: Market in a Unilateral Downtrend (Jan 17-28)
In the latter half of January, the domestic Dimethyl Carbonate (DMC) market experienced a continuous and accelerated downward price movement, primarily driven by ample supply. According to monitoring by the Business Society Commodity Market Analysis System, as of January 28th, the average price of domestic industrial-grade DMC was 3,750 RMB/ton, representing a decline of 5.7% within the period.

Core Contradiction: Intensified Supply-Demand Loose Structure as the Main Driver of Decline
The release of new capacities, such as from Jingmen Yuanhan, coupled with weak pre-holiday stocking demand from downstream electrolyte and traditional sectors, led to continuously increasing market inventory pressure.

Core Driving Factors

1. Supply Side (Strong Negative Factor): Coexistence of Capacity Release and High Operating Rates

• New Capacity Continues to Release: On January 13th, Hubei Jingmen Yuanhan's battery material precursor project commenced trial production, with its 200,000 tons/year DMC unit starting to supply products to the market. This represents the most significant supply increment during the period, fundamentally altering market supply-demand expectations.
• High Load Operation of Existing Units: Against the backdrop of already high industry capacity, major production units maintained high operating rates with no large-scale maintenance plans, exacerbating spot supply pressure.
• Proactive Inventory Reduction by Enterprises: Facing the Spring Festival holiday and bearish expectations, producers and holders exhibited strong willingness to accelerate destocking and offer discounts for shipments before the holiday. This proactive price-cutting behavior amplified the price decline.

2. Demand Side (Weak Support): Comprehensive Slowdown in Procurement from Major Downstream Sectors

• Electrolyte Demand Falls Short of Expectations: Due to weaker-than-expected growth in terminal battery demand and a shift in procurement focus towards raw materials like lithium carbonate, electrolyte companies maintained only rigid, small-volume purchases of DMC, leading to a collapse in demand support.
• Pre-holiday Restocking by Traditional Downstream Sectors Concludes: Pre-holiday restocking by traditional downstream industries like Polycarbonate (PC) and coatings was largely completed. Although the PC industry shows positive medium-to-long-term supply-demand prospects, short-term operations were stable to slightly lower due to the holiday and macroeconomic factors, resulting in poor enthusiasm for DMC stockpiling.
• "Buy on Rise, Not on Fall" Mentality: Once the clear downward price trend was established, downstream players widely adopted a wait-and-see approach with cash on hand, anticipating lower prices, which led to increasingly thin actual market transactions.

3. Cost Side (Limited Support): Mixed Movements in Raw Material Prices, Profit Margins Shrink

• Propylene Oxide (PO): Prices fell by 5.02%. As a key raw material for DMC, its weakness directly undermined the cost support for DMC. Coupled with narrowing profits for the EO/PO transesterification process, companies' willingness to reduce prices and destock increased.
• Methanol: Prices increased by 3.08%. However, methanol's proportion in DMC raw material costs is relatively low, and the decline in PO was more significant. Therefore, the overall cost structure remained weak.
• Dimethyl Ether (DME): Prices remained flat, having no significant impact on DMC costs.

IV. Short-Term Outlook
Overall, the DMC market is expected to maintain a pattern of "weak stability, stalemate, and low-level fluctuation" before the Spring Festival.

• Pre-holiday (Until Early February): As downstream factories and logistics gradually halt operations, the market will enter a state of "nominal prices with no real market," characterized by extremely thin transactions. Under the dual pressures of ample supply and a demand vacuum, prices lack upward momentum and are expected to consolidate at current low levels.
• Key Post-holiday Inflection Point (Late February): The market's turning point depends on the pace of downstream resumption after the holiday. Whether downstream demand can recover as expected in late February, and whether the supply side can see concentrated spring maintenance to offset new capacity, will be crucial for prices to stop falling and stabilize. Close attention should be paid to the operating plans of major production units.