High inventories and sluggish trading extend the decline in dichloromethane.

Lead: In August, the domestic dichloromethane market began to enter a downward channel, with prices showing a pattern of high-frequency declines. The industry fell into a predicament of supply-demand imbalance and a lack of effective support. The price decline was mainly the result of multiple overlapping pressures: high industry supply, high inventory levels at production enterprises, and weak downstream terminal demand, which together extended the dichloromethane market's downward trend. As of August 14, the dichloromethane price in the Shandong region stood at 1,910 yuan/ton (range: 1,900–1,920 yuan/ton), down 290 yuan/ton from the level before the decline, a drop of 13.18%.

The domestic dichloromethane market continued its downward trend, with market conditions remaining under sustained pressure. The supply side was broadly loose, with industry operating rates maintaining relatively high levels and market supply remaining ample. Some enterprises saw continued inventory accumulation, highlighting inventory pressure. Downstream terminal demand was weak, constrained by low operating loads at downstream plants, which limited the actual raw material consumption capacity and exerted strong demand-side downward pressure on dichloromethane from the downstream end upward. In addition, under the strain of sluggish shipments, regional price spreads widened once again.

I. Notable inventory pressure at some enterprises; ample supply

The supply side presented a loose posture. During the period, China's methane chloride (dichloromethane + chloroform) output reached 72,200 tons, up 3.14% week-on-week; capacity utilization stood at 80.62%, up 2.45 percentage points from the prior period. Within the reporting period, although Henan Jinhai's unit was shut down at the end of the period and Jiangsu Fuqiang's 300,000-ton/year unit was reduced to 70% operating load, the Jinling Dawang plant returned to full-load operation. The volume of restored capacity outweighed the volume lost, driving capacity utilization higher. Currently, the co-product chloroform faces significant sales pressure, prompting some enterprises to adjust the output ratio between dichloromethane and chloroform, resulting in increased dichloromethane output. Combined with poor sales, enterprise inventories largely showed an accumulation trend, and the current inventory situation at enterprises has become the main factor influencing market conditions.

Table 4: Domestic methane chloride supply-demand balance (unit: 10,000 tons)

II. Downstream operating rates constrained; insufficient demand follow-through

Demand remained weak overall, with the entire downstream chain entering the off-season. At present, the mainstream downstream applications of dichloromethane show a clear divergence. Small and medium-sized downstream enterprises in sectors such as solvents and cleaning agents only maintained routine essential restocking, with procurement on an as-needed basis becoming the prevailing practice. In the core downstream refrigerant R32 sector, the comprehensive operating rate has fallen to around 50%. In August 2026, household air conditioner production is scheduled at 10.73 million units, a year-on-year decline of 6.23% and a month-on-month decline of 23.08%; domestic sales production is scheduled at 5.87 million units, down 12.84% year-on-year and 33.14% month-on-month; export production is scheduled at 4.86 million units, up 3.23% year-on-year and down 6.00% month-on-month. Refrigerant producers continued to adopt a business strategy of controlling output to support prices, further suppressing demand for dichloromethane procurement.

III. Raw material prices relatively high; cost impact on dichloromethane increased

Raw material methanol remained at high levels, while liquid chlorine prices first fell and then rebounded. Cost pressure on methane chloride remained significant. Moreover, both dichloromethane and chloroform prices moved weakly during the period, leaving methane chloride producers with heavy losses. According to calculations based on Chempricehub data, the weekly average profit for methane chloride during the period stood at -331 yuan/ton, up 1 yuan/ton from the prior period's average, an increase of 0.30%. Given the relatively heavy losses in methane chloride, enterprises had limited willingness to offer further substantial price concessions, and the cost side's influence on dichloromethane prices increased in significance.

IV. Further declines still possible, but limited in magnitude

Overall, the dichloromethane market will continue to face a two-sided weak pattern of ample supply and off-season demand in the coming period. The dichloromethane price in the next period is expected to continue declining from the weekly average of the current period. On the supply side, although output in the next period is projected to decline versus this week, the current accumulation of enterprise inventories means overall supply remains very ample. On the demand side, bearish sentiment persists in the market. Downstream buyers and traders are expected to maintain the same procurement pace as in the current period, making large-scale bulk purchasing unlikely to emerge in the market. In the short term, supply-demand fundamentals remain the primary factor driving price adjustments. With shipment of goods as the dominant consideration, the dichloromethane market may still have some room for a weak decline. However, given the relatively heavy losses currently borne by methane chloride producers, cost-side support for methane chloride has strengthened somewhat. Therefore, the room for further declines in dichloromethane is expected to be relatively limited. Close attention should be paid to the impact of high costs and to the effects of sluggish chloroform co-product sales on production units.