In August 2026, China's dimethyl carbonate (DMC) market staged a remarkable one-way rally. As of August 26, the average price of domestic industrial-grade DMC had been pushed up to RMB 4,600/mt, up more than 5% from mid-August. In the Shandong market, mainstream negotiated prices even touched RMB 4,550–4,650/mt ex-works on a bank acceptance basis, with the price center repeatedly hitting fresh period highs. At the tail end of the traditional off-season for chemical products, DMC, underpinned by its distinctive supply-demand fundamentals, delivered a price-surge performance fueled by supply contraction and robust rigid demand.
Supply-side "contraction game": Unit restarts cannot offset the depletion of tradable supply
The core driver of this round of gains came from sustained supply tightening and an expectation gap. Although the domestic DMC industry still carries a huge capacity base and the shadow of overcapacity has not yet lifted, effective output in August was significantly below market expectations. Several major units that had entered maintenance earlier saw their restart progress fall far short of what the market had anticipated. While some units had already entered the resumption process, actual output remained extremely limited due to prolonged commissioning periods, making it difficult to inject effective incremental supply into the market in the short term. The mismatch between the "expected recovery" and the "actual tightness" served as the direct trigger for price gains.
In the meantime, resource misallocation in the distribution chain further aggravated the spot supply crunch. Major domestic producers gave priority to fulfilling long-term agreement orders and previously signed contracts, locking up most cargoes and leaving only a tiny volume of spot supply actually available to the trading market. Even more noteworthy, August marked the concentrated delivery window for export orders, with most plants diverting substantial volumes of supply to ports for export. The new "separate shipment, centralized inspection" customs clearance model introduced by the General Administration of Customs also improved export efficiency to some extent, accelerating the outflow of domestic cargoes. This dual diversion effect—less supply for the domestic market and more for exports—kept domestic plant inventories persistently low, deepened producers' reluctance to sell at low prices, and prompted them to raise offers in succession.
Demand-side "passive following": Essential-demand anxiety amid low inventories
Facing persistently rising feedstock prices, the downstream market displayed a distinct "passive restocking" pattern. With feedstock inventories generally limited from earlier procurement, end-users held low stock levels. Pressured by shrinking supply and escalating prices, downstream buyers were compelled to pull forward their essential procurement. In particular, within the lithium battery electrolyte solvent segment, rigid demand from the new energy and energy storage sectors provided a fundamental floor of support for DMC. In the traditional polycarbonate (PC) and coatings/adhesives segments, although overall demand did not surge, the psychology of "buying on rising prices rather than falling prices" noticeably accelerated the pace of inquiries and purchases, further enlivening the market.
Costs and profits: Squeeze and support from high-priced feedstocks
Although upstream feedstock propylene oxide pulled back from higher levels in late August, its overall price center remained elevated, and methanol prices also moved up in tandem. While high feedstock costs were not the core engine behind this DMC price rally, they did reinforce producers' willingness to hold prices firm and limited the downside space for prices to a certain extent. That said, it also means that with price pass-through to downstream products hindered, end-use enterprises will face greater pressure to absorb costs.
Market outlook: On the whole, the August DMC market was a classic "supply-demand mismatch"-driven rally. In the short term, the tight spot supply pattern will be difficult to reverse quickly, given the slow pace of unit restarts and continued export order deliveries. The price center is therefore likely to remain in a firm consolidation with an upward bias, and may even have some room to probe slightly higher.
However, the hidden concerns of operating at elevated levels should not be overlooked. As prices climb to relatively high levels for the current phase, downstream resistance to expensive feedstock has begun to emerge, and the inclination to chase further gains is turning cautious. Once the previously maintained units resume normal operating rates, combined with expectations of new capacity coming on stream further out, market supply will gradually increase. At that point, the supply-demand balance may shift from "tight" to "loose," exposing the market to the risk of a correction from elevated levels. The key to the market's direction ahead will hinge on the actual pace of unit restarts and the sustainability of export orders.
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