Methylene Dichloride prices in China remain stable amid steady supply, variable demand, and modest cost pressures, with potential slight rebound or decline depending on downstream inventory and buyer sentiment.
In the first two weeks of June, Methylene Dichloride prices in China have held steady as the market was impacted by minor changes in supply, variation in feedstock prices, and inconsistent demand recovery from the downstream market. While initial weakness followed the Dragon Boat Festival due to oversupply and subdued downstream interest, a mild price rebound emerged as restocking at lower price levels provided limited support.
Supply-side dynamics had a major influence on stability in the market. While some producers have enacted production decreases (i.e., Shandong Luxi and Jiujiang Jiuhong), the overall industry's operating rates rebounded back up to nearly 80%, which has helped keep output steady. However, higher inventory levels from the holiday and several producers focusing on destocking will continue to create periodic price pressure. In terms of the cost of feedstocks, methanol saw a rare increase during the review period of about 3.1%. Meanwhile, liquid chlorine's price fluctuated upward, slightly increasing production costs.
Even with these cost pressure concerns, substantial selling pressure from inventory holders and relatively steady operating rates from most major facilities continue to keep Methylene Dichloride prices and price fluctuations relatively mellow.
Methylene Dichloride demand appeared variable across the various markets. The refrigerant industry remained at a peak in the consumption of Methylene Dichloride. The price of R32 was up by 42% compared to year-ago prices. Most refrigerant producers utilize their own Methylene Dichloride and have poor local demand because they restrict their use by quotas and, to some degree, self-sufficiency.
Coatings and adhesives received a boost from seasonal demand in the increased activity of construction and renovation in June. Demand improved on a month-to-month basis, but the market is transitioning to low-VOC solvents due to environmental regulations, limiting growth in Methylene Dichloride use.
Electronics cleaning is gaining some momentum, backed by various new energy vehicles, energy storage, and consumer electronics expansions are still underway. There was a stable demand for high-purity Methylene Dichloride. Meanwhile, the pharmaceutical sector is still buying in just-in-time form of exactly what they need now, and some are looking for greener options under increased scrutiny for the environment.
Moving forward, as per ChemAnalyst, it is anticipated that China's Methylene Dichloride market will stay in a consolidation phase. A slight price rebound may occur if downstream sectors like coatings and electronics continue inventory replenishment. However, if buyer sentiments shift to hesitation amidst continued availability of supply, prices may drop again in the short term.
