Disrupted Demand Suppresses Di-Methyl Carbonate Market in China
- 26-May-2022 5:57 PM
- Journalist: Kim Chul Son
Singapore: In the first quarter of 2022, new cases of COVID-19 resurged in China. The market dynamics shifted tremendously, almost identical to the global economic scenario in 2020 but confined within a limited region. The situation reflects a slight improvement that led to the stricter implementation of the restrictions to control the spread. Still, the situation is more prolonged than the last time the Chinese authorities successfully controlled the spread in early 2020.
As a result, the present scenario gyrated the commodity markets across China, as the resurgence of COVID impacted the overall demand outlook in the domestic market. The only driving factor for the Chinese manufacturers is the overseas orders and inquiries, but the slower onloading and offloading activities at the ports led to the delayed deliveries and excess congestion at the major Chinese ports. Furthermore, it caused a delay in the delivery of critical automotive parts, resulting in the curtailment and suspension of electric vehicle manufacturing in several facilities. That levy directly impacts Electric Vehicle battery manufacturing and the essential raw materials used in the process. Electrolytes are the major component that is impacted by the current situation, and the producers of Di-Methyl Carbonate and other carbonate-based electrolytes have been constantly adjusting the operational rates at the production facilities to maintain better netbacks since the second half of the first quarter of 2022.
The producer's offer for Di-Methyl Carbonate (DMC) consistently fluctuated in China. Still, with limited inquiries from the downstream industries, the market movement for the DMC was suppressed. Recently, the producer's quotations for Di-Methyl Carbonate have been staggering in a downward trajectory as the quotations witnessed a drop of (-2.34%) on a month-on-month basis.
As per ChemAnalyst, the producer's quotations for Di-Methyl Carbonate and all the Carbonate based electrolytes used in the Electric Vehicle batteries are likely to remain suppressed until the second quarter. Whereas the market transactions have remained cold, the manufacturers were desperate to destock their current inventories, which led to a significant discount in the extensive inquiries placed by domestic and overseas buyers. The market movement has been moving at a significant pace after the Chinese authorities decided to ease the restriction to maintain an arbitrage with the overseas market at a time when global inflation is soaring at an unprecedented pace, and the upcoming market sentiments are clouded with uncertainties.