Limited operating rates in the methylene chloride industry during holidays; market prices remain stable at elevated levels

Introduction: During the National Day holiday, domestic chloromethane units showed little change compared to pre-holiday levels, with most operating at medium-to-low loads. Industry capacity utilization remained around 65%, a relatively low level for the year. Inventory pressure among regional enterprises was not significant. However, logistics and downstream demand lacked substantial support. Amidst bullish and bearish market forces, trading activity in the dichloromethane (DCM) market was sparse during the holiday, resulting in a largely stalemate situation.

I. Pre-Holiday Restocking Based on Rigid Demand; Most Enterprises Face No Significant Inventory Pressure

In the final days before the National Day holiday, DCM prices continued to run at high levels. High raw material costs constrained production, putting pressure on chloromethane producers and limiting overall operating loads. This led to a notable reduction in regional supply, providing underlying support for the market trend. Currently, industry utilization is below 70%, with several units reducing load or shutting down, leaving some producers with no inventory pressure. As the holiday approached, restocking by downstream users and traders was largely completed, causing trading momentum to slow due to insufficient follow-through from the demand side. During the holiday, supply-demand fundamentals maintained balance. Ex-factory prices in the Shandong region ranged from 2,880 to 2,940 CNY/ton, with the average price remaining stable compared to pre-holiday levels.

II. Industry Utilization Remains at Medium-Low Levels; Inventory Pressure Is Manageable

Currently, chloromethane enterprises are facing heavy losses due to high raw material costs. There were no clear start-up or shut-down plans for units during the holiday, keeping domestic capacity utilization around 64%. As of now, the daily average output of chloromethane is approximately 8,204 tons. Compared to last year’s National Day holiday, daily average output decreased by about 2,000 tons, representing a roughly 21% reduction in production load.

From a demand perspective, there was no widespread shutdown of downstream enterprises during the holiday, although individual units did halt operations, leading to minor adjustments in downstream operating loads. However, consumption during the holiday primarily drew down previously stocked inventories, with limited new orders.

III. Post-Holiday DCM Market Likely to Maintain High-Level Operations

After the holiday, there have been no confirmed unit restarts. However, some regional units plan to shut down, and given that inventory pressure remains manageable for many enterprises, quotes are expected to remain steady. On the demand side, enthusiasm for restocking was limited before the holiday due to high DCM prices. It is anticipated that some downstream users will resume purchasing after the holiday, though this will likely be driven mainly by rigid demand. Overall, while trading intensity slowed during the holiday, market activity is gradually recovering as logistics capacity returns. With enterprise inventory pressure remaining low, the post-holiday market is expected to consolidate and observe trends, with attention focused on subsequent market developments.