Introduction: Entering mid-May, the domestic dimethyl carbonate (DMC) market has experienced a downward trend, with low-end prices continuously declining. Against a backdrop of fundamental pressure, the market finds itself in a "difficult situation to rise or fall." The core contradiction lies in the interplay of three major factors: sustained release of supply-side pressure, sluggish downstream demand follow-through, and continuous collapse of cost support. Although foreign trade orders once provided brief support, under multiple pressures, the overall market has transitioned from a high-level stalemate to a narrow, gradual decline.

Supply Increase: Unit Restarts Raise Operating Rates; Inventory Transmission Blocked

The primary pressure facing the market this week stems from the continuous increase on the supply side. After a brief adjustment following the May Day holiday, previously overhauled units have resumed operations sequentially. According to data from ChemPriceHub Information, as of today, China's DMC weekly capacity utilization rate remains at a relatively high level of 66.13%.

With the resumption of normal operations at previously overhauled units such as Hubei Yuanhan and Shandong Wells, the spot market circulation volume has increased significantly. However, downstream pickup speed has not kept pace simultaneously, causing factory inventories to gradually shift to midstream social inventories. Enterprises have a strong desire to destock. Under a loose supply pattern, competition among holders has intensified. Some factories, even near their cost lines, have opted to offer discounts to relieve financial pressure.

Weak Demand: Domestic Demand Mostly Basic; New Orders Lack Momentum

In stark contrast to the "bustling" supply side, demand remains "sluggish."

Looking at the major downstream sectors, the electrolyte solvent segment is the primary destination for DMC. Currently, orders in the end-market for new energy vehicles are lackluster. Electrolyte companies are mainly consuming inventories and fulfilling long-term contracts, showing low enthusiasm for new inquiries, with widespread price suppression. On the other hand, for polycarbonate (PC), the capacity utilization rate stands at 67.32%, a decrease of 6.40 percentage points from the previous period. This week, the operating load of Zhejiang Petrochemical's PC unit has gradually declined. The overall operating load of other domestic PC units is generally stable compared to the previous period. Both domestic PC industry output and capacity utilization rates have declined sequentially. Procurement of raw material DMC remains at a basic demand pace, failing to provide effective demand increments. In traditional fields such as coatings and adhesives, the market also lacks demand. Downstream users hold bearish views on the future, maintaining only minimum raw material inventories due to a "buy on rising, not on falling" mentality. Transactions are mostly small volume at low prices.

It is noteworthy that at the end of last week, the market experienced a brief surge in transaction volumes and slight price increases due to a concentrated batch of export orders. However, as the delivery of foreign trade orders enters its final stage, follow-up inquiries for new foreign trade have noticeably insufficient. The stimulating effect of export gains on the domestic market has rapidly diminished, cooling down the market transaction atmosphere.

Cost Decline: Raw Material Support Crumbles; Market Bottom Shifts Downward

The collapse of the cost side is the fundamental reason why DMC market price centers could not remain high this week. The main raw material, propylene oxide (PO), has recently performed weakly.

During this period, the domestic PO market experienced a volatile downward trend. After a brief sideways movement around the 10,000 yuan/ton mark, although cost-side support remained, the supply-demand situation was relatively loose and weak. There were no clear signs of improvement in market sales. At the beginning of the week, some in-production factories faced pressure and loosened negotiations. Subsequently, as prices openly fell to a phase low point, the price spread between PO and propylene in some regions almost disappeared. Downstream players, seeing limited risk, followed up moderately. Meanwhile, some suppliers reduced loads and volumes, allowing the market to stabilize temporarily, with all parties digesting corrections sideways.

During this period, the mainstream price in the Shandong market fell from the beginning-of-week level of 3,625 yuan/ton (acceptance, ex-works) to a range of 3,350-3,600 yuan/ton by May 14. The actual negotiation center shifted downward. Due to the failure of cost transmission, DMC factories find themselves in a dilemma of "losing money or barely making a profit through production." This leaves them in a quandary regarding pricing: raising prices lacks demand support, while lowering prices means facing losses directly.

Future Outlook

In summary, the domestic DMC market has struggled this week under the triple negative pressures of supply, demand, and costs. Although current prices are at relatively low levels, and some high-cost units have expectations of production cuts, providing certain psychological support to the market, downstream purchasing willingness is difficult to mobilize, and a strong rebound on the raw material side is unlikely. It is expected that the DMC market will maintain a weak and volatile pattern in the short term. If factories cannot balance the supply-demand contradiction through proactive load reduction in the later period, the market may not rule out the possibility of further bottom-seeking.