Market Overview: (12.9-12.16)
Under the combined effect of rising costs and brief supply contraction, the domestic dichloromethane market has experienced a “pulse like” rebound. According to the monitoring of the commodity market analysis system of Shengyi Society, as of December 16th, the average price of dichloromethane dispersed water in Shandong Province was reported at 1790 yuan/ton, an increase of 6.23% during the week. However, the huge year-on-year decline of 38.8% reveals that the fundamental pattern of market supply-demand imbalance has not changed.
In the early stages, rainy and snowy weather caused seasonal increases in logistics costs, coupled with some production facilities in the Shandong region actively reducing their load, jointly forming a short-term positive trend of “cost push up+supply reduction”. This has stimulated the stocking sentiment of some downstream and traders, eased the inventory pressure of enterprises, and increased their willingness to raise prices. As prices rise, the motivation for downstream follow-up procurement has weakened, and there is a serious shortage of sustainable consumer demand.
Supply side: Short term disturbances are difficult to change the loose pattern
This week, the reduction in load of devices in the region is a key variable supporting prices. Relieve the inventory pressure of enterprises and release the market signal of “tight supply”. However, this support is extremely fragile. According to market information, the load reduction device has begun to slowly recover, and expectations for supply growth are strengthening. In the medium to long term, it is normal for the domestic dichloromethane production capacity to be abundant and the industry operating rate to remain relatively high. Once the temporary production reduction ends, the market will once again face supply pressure.
Demand side: Weak demand limits rebound height
Unstable main demand support: As the largest downstream refrigerant industry, leading enterprises often provide upstream raw material equipment and have limited dependence on externally purchased dichloromethane.
Other fields are generally sluggish: in high-end fields such as medicine and electronics, although demand is stable, the total amount is limited; In other traditional application fields, it is subject to the dual pressure of insufficient macroeconomic prosperity and environmental substitution. Both downstream factories and traders generally adopt the strategy of “purchasing on demand and replenishing inventory at low prices”, and the market lacks speculative and reserve demand, which cannot provide sustained support for price increases.
Cost side: Raw materials rise to form solid support
Liquid chlorine: The price cycle first falls and then rises, currently at a relatively high level, which directly and significantly puts pressure on the production cost of methane chloride.
Methanol: Market sentiment has improved, prices have stabilized and rebounded, and sellers’ reluctance to sell and buyers’ entry at low prices have jointly driven a slight increase in prices. As of December 15th, the benchmark price of methanol in Shengyi Society was 2102.5 yuan/ton, an increase of 1.08% during the period.
The high cost seriously squeezes the profit margin of production enterprises, putting enormous pressure on them to reduce prices and inventory, restricting the space for market prices to fall deeply, and forming a “rigid bottom support”. However, it should be noted that when demand is weak, cost support can only prevent a sharp drop in prices, but cannot alone drive prices to continue rising.
Market outlook: weak consolidation, waiting for new variables
In the short term, as the equipment recovers, the short-term support from the supply side for the market will dissipate. However, there have been no signs of improvement on the demand side, and the market lacks new upward drivers. It is expected that the price will slightly rebound from the current high point and find a new equilibrium point near the cost line, showing a narrow range oscillation and a slight downward shift in the center of gravity.