After the May Day holiday, the domestic dichloromethane market was affected by three aspects: low inventory, strong demand and bullish market sentiment, and prices continued to rise. In half a month, the average market transaction price in Shandong increased from 3,500 yuan/ton to 4,200 yuan/ton, an increase of 21.8%, and the price hit a new high since 2019.
However, starting from the second half of the month, the dichloromethane market has diverged. After the market price of methylene chloride rose to a high level on May 17, downstream solvent and pharmaceutical manufacturers were less accepting of the current high-priced sources, and traders’ resistance also increased. The market demand had few transactions except rigid demand, and traders were With a bearish mentality in the market outlook, low prices frequently come out. Although there is still a certain rigid demand in downstream such as film, thinner and foaming agent, resistance gradually accumulates and the market mentality weakens.
In terms of supply, the overall operating rate of domestic methane chloride manufacturers was 73.14% at the end of May. However, with the implementation of new production capacity and the increase of production load by some of the earlier load reduction devices, the market supply will be looser than the previous period.
In terms of new capacity, Jiangsu Fortune's 100,000-ton/year methane chloride plant has been put into operation, and market supply has increased. Shandong Jinling, Shandong Dongyue and other facilities are operating at full capacity, and Luxi Chemical's 400,000-ton/year facility has been increased to 80% capacity. The industry expects that the market outlook will be relatively loose.
It is worth noting that the upstream cost of dichloromethane also lacks bright spots, the price of methanol has dropped slightly, the price of liquid chlorine is at a low level, and the cost support will weaken in the later period.
In terms of methanol, the current spot market is sluggish, and the demand side is unlikely to be greatly boosted in the short term. On the one hand, methanol companies are less likely to reduce production, and domestic supply will remain stable in the short term; on the other hand, port inventories continue to accumulate, and future demand side boosts will be limited. With the gradual increase in the operating rate of the external disk device, the international methanol price has fallen, while the domestic coastal area prices have been firm, the import window has been greatly opened, and the future import volume will steadily return to the level of more than 1 million tons. The downstream olefins have reached the break-even line or even partly lose money, which has a significant suppressing effect on the top of methanol operation. In the short term, methanol prices may return to rationality.
In terms of liquid chlorine, the market supply has been relatively sufficient since May, but the terminal demand has remained flat, and the price has been hovering at a low level and consolidating. Manufacturers' shipments are not good, and traders and downstream companies are more likely to lower prices. The North China market has been affected by safety inspections, and liquid chlorine has been slow to sell, and the price is relatively low. As of May 24, the mainstream ex-factory price of liquid chlorine for tank trucks in Shandong was between RMB 1,150 and RMB 1,200, a year-on-year decrease of around RMB 200. In the future, the number of chlor-alkali companies overhauled is relatively small and the supply of liquid caustic soda is relatively sufficient. The demand market for downstream industries is flat, and the market is unlikely to have strong support.
In the short-term, it is expected that there is still room for decline in the methylene chloride market in East China and South China. In southern China, due to the low inventory of the main production enterprises and the lack of pressure on shipments, it is not ruled out that the continued increase is not ruled out, but due to the decline in other regions, the expected increase is also limited.
