In early October, the dichloromethane market continued its upward trend and the price center continued to shift upwards; In mid October, it rose and then consolidated at a high level, followed by a significant decline on October 19-20. The current market has shifted from strong support of “cost+supply” in the early stage to a pullback stage under insufficient high-level demand, and is expected to experience weak fluctuations in the short term. As of October 20th, the mixed price of dichloromethane in Shandong region was 3020 yuan/ton, an increase of 3.16% from the beginning of the month.
Analysis of Core Driving Factors
Cost side:
After the holiday, methanol rose first, and the price of liquid chlorine was also at a high level, driving the rise of dichloromethane. In the middle of the month, methanol quickly plunged from rising to falling; And dichloromethane continues to rise against the trend, indicating that this round of market trend is not solely driven by cost. Methane chloride enterprises face significant cost pressures, with low industry operating loads and tight spot supply. The main driving force behind the market trend is factory control of quantity and price. Recently, the continuous decline of raw material methanol coupled with high prices suppressing downstream demand procurement has made it difficult to sustain high prices, and dichloromethane has entered a phase of correction.
Supply and demand side:
Supply: After the holiday, the industry’s operating load has further decreased compared to the previous period. Low operating hours, combined with pre holiday stocking and post holiday replenishment, have led to rapid consumption of social inventory. Enterprise inventory has generally fallen to a low level, with some areas experiencing tight supply and limited sales, driving the market to continue to rise. But as prices continue to rise, the high price dividend gradually fades away, and the confidence of factories to raise prices loosens.
Demand: Under high prices, downstream procurement attitudes have become noticeably cautious, with more wait-and-see and temporarily not stocking up in large quantities. The company’s shipment volume is lower than expected, and shipping pressure is transmitted from the production end to the trade end. The demand side has limited capacity to undertake, and downstream procurement in the fields of R32 refrigerants, coating adhesives, pharmaceutical solvents, etc. is still mainly based on rigid demand. The production of downstream refrigerants is not high, and the increment is limited under the quota constraints in the fourth quarter; The export increment is limited, and the acceptance of high priced goods by terminals is weak. The transaction atmosphere has not strengthened synchronously.
Future forecast
The short-term market is mainly weak and volatile, and there is room for further downward price exploration. The current downward trend in methanol prices has weakened the cost support force; High prices suppress downstream procurement, and there is a lack of follow-up on demand. Traders are more willing to ship at high prices, and market sentiment is bearish. However, the overall inventory of enterprises is not high, coupled with the expectation of equipment maintenance in November, the space for deep decline is limited, and there is support below.