Cost-Driven: Dichloromethane Prices Surge Over 35% in March
Overall Trend: Initial Surge, Followed by a Pullback, Then a Moderate Recovery
In March, the domestic dichloromethane market experienced a classic “rollercoaster” ride, broadly unfolding across three distinct phases:
Early March: Rapid Ascent Phase. Driven by surging prices for key raw materials—methanol and liquid chlorine—and bolstered by strong cost-side support, dichloromethane prices skyrocketed. Prices were pushed up to 3,265 RMB/ton, marking a phase-specific increase of a staggering 86.04%; this constituted the core period of explosive growth for the month.
Mid-March: High-Level Pullback Phase. After prices had surged to a peak, downstream consumers and traders became cautious about accepting orders for high-priced goods, leading to a significant buildup of inventory pressure among manufacturers. Compounded by a decline in liquid chlorine prices and a weakening methanol market, cost-side support began to erode, forcing manufacturers to lower prices in an effort to clear inventory. By March 20, prices had fallen to 2,175 RMB/ton—a decline of approximately 33.38% from the peak.
Late March: Moderate Recovery Phase. As methanol and liquid chlorine prices staged a broad-based rebound, cost-side support strengthened once again. Manufacturers demonstrated a strong resolve to hold firm on pricing, and following its bottoming-out, dichloromethane prices began to edge upward slightly.
According to the Business Society’s Commodity Market Analysis System, as of March 24, the blended bulk price of dichloromethane in the Shandong region stood at 2,385 RMB per ton. Driven by persistent upward pressure on costs, market prices surged 35.9% compared to the beginning of the month; however, weighed down by a supply-demand imbalance, prices recorded a year-on-year decline of 7.38%. This trend highlights the core contradiction currently characterizing the market: “strong cost-side support, yet significant drag from demand.”
Cost Front: Raw Material Volatility Dominates Market Trends
Liquid Chlorine: In the Shandong region, the liquid chlorine market experienced a sharp surge during the first ten days of the month, followed by high-level fluctuations in the middle ten days, before retreating and gradually stabilizing during the final ten days—demonstrating a pattern of intense volatility. Its price trajectory was highly synchronized with that of dichloromethane, serving as the key cost variable responsible for the “rollercoaster” market performance observed in dichloromethane this month.
Methanol: Influenced by the conflict in the Middle East—which has led to expectations of tighter methanol imports from Iran—domestic methanol prices have trended upward amidst market volatility, thereby driving up production costs. According to data from SunSirs, the price of methanol stood at 3,170 yuan per ton on March 24; this represents a surge of 44.09% compared to early March, providing strong cost-side support for the price recovery observed in the dichloromethane market during the latter half of the month.
Supply and Demand: A Coexistence of Ample Supply and Sluggish Demand
Export Disruptions and Inventory Pressure: Due to significant declines in export orders from the Middle East—stemming from issues such as shipping disruptions and vessel delays—cargo originally earmarked for export has been diverted back to the domestic market, resulting in an increase in domestic supply. Concurrently, inventories held by manufacturing enterprises have continued to accumulate, leading to a decline in market trading activity.
Supply: Stable with an Upward Trend — Within the region, production units at various enterprises are undergoing a mix of operating rate reductions and increases; consequently, the overall operating rate remains steady at approximately 80%. Currently, as production units gradually resume operations, market supply is exhibiting a trend of stability accompanied by a slight upward shift.
Demand Recovery Falls Short of Expectations — Demand from downstream sectors—including refrigerants, pharmaceuticals, and solvents—has failed to show any significant volume growth, falling short of prior market expectations. End-users have generally adopted a cautious procurement strategy—buying “on demand” and “just in time”—resulting in overall sluggishness in market trading activity.
Market Outlook:
Looking Ahead to April — The dichloromethane market is expected to continue its pattern of broad-range volatility, characterized by an interplay of bullish and bearish factors.
Cost Support Persists, Yet Volatility Risks Remain High: Methanol prices are holding at elevated levels—bolstered by expectations of reduced imports—thereby providing a floor of support for the market. However, liquid chlorine serves as a critical variable; should subsequent supply recovery lead to a price decline, it would directly undermine the cost-driven support for dichloromethane.
Supply-Demand Imbalances Await Resolution: On the supply side, market availability is ample as production facilities resume operations. On the demand side, close attention must be paid to the inventory stocking pace of downstream industries. If demand fails to keep pace, the pressure of high inventory levels may compel enterprises to offer further price concessions.
Market Sentiment Remains Cautious: Following this month’s sharp price swings, traders and downstream users have adopted a highly risk-averse stance, resulting in diminished speculative demand. In the short term, the market is expected to remain locked in a tug-of-war between cost-side support and weak demand. Prices are projected to follow a trajectory of intermittent rebounds followed by sideways consolidation; therefore, it is advisable to closely monitor fluctuations in raw material prices and the purchasing patterns of downstream sectors.
