In the first half of the year, the overall domestic dichloromethane market showed a shock trend, and the price rose first and then fell, which was basically consistent with our expectations in the 2022-2023 China dichloromethane Market Annual Report, but the overall market amplitude was significantly smaller than expected, mainly because under the strong expectation of economic recovery, the contradiction between domestic supply increase and weak demand recovery was obvious. It is difficult for the market to get out of the low range. From January to June 2023, the average price of dichloromethane dispersed water in Shandong was 2,523 yuan/ton, down 44.79% from the same period last year. On June 30, Shandong dichloromethane closed at 2,330 yuan/ton, an increase of 3.43% from the beginning of the year.

Since 2023, the domestic dichloromethane market has fluctuated frequently, but the overall fluctuation space is not large. In Shandong, for example, the price peak appeared in the middle of March, the factory price of dispersed water rose to 2840 yuan/ton, mainly driven by strong export demand, and the stage of supply and demand is good, promoting the price rise. The low price appeared in early January, the factory price of loose water as low as 2250 yuan/ton, mainly because of the supply pressure of the industry in December, and the Spring Festival holiday in January, the market expected oversupply contradiction is prominent, affecting the overall mentality is short, and the price fell to a low point.

Since 2023, domestic dichloromethane has continued to fluctuate in the low range, and the overall fluctuation is frequent, but the adjustment is lack of continuity, and the market trend can be basically divided into two stages in the first half of the year.

The first stage is the market bottoming out under the influence of "strong expectations". At the beginning of the first quarter, the price of dichloromethane has reached a low point, although the Spring Festival holiday in January, there is a shutdown of the terminal, and the demand has declined, but the industry expects that the demand will be better after the New Year, and the market stock scale before and after the Spring Festival is significantly more than expected, making up for the pressure brought by the decline in demand. In addition, after the Spring Festival holiday, the acceptance of low prices by foreign investors has also been significantly improved, and foreign trade has made great efforts in February-March. In the first quarter, under the expected pull, the domestic dichloromethane price showed a low rebound trend, in mid-March, the market price rose to the high point in the first half of the year, taking Shandong as an example, the factory price of dispersed water was up to 2840 yuan/ton, and the average price in the first quarter was 2546 yuan/ton.

The second stage is the suppression of oversupply in the situation of "weak reality". The second quarter is the traditional seasonal demand of dichloromethane small peak season, the operators have some optimistic expectations, but the market in 2023 shows a clear peak season characteristics, production enterprises in the context of low cost, high profit start generally at a high level, coupled with the first quarter of the business part of the obvious stockpiled goods, the supply pressure in the second quarter of the industry, but the demand continues to show no improvement. The overall domestic demand is less than expected, the main downstream refrigerant, pharmaceutical and other industries have a contraction in demand, the impact on the market mentality is more obvious, resulting in the second quarter of the market into a low shock situation, the overall center of gravity moved down, taking Shandong as an example, the factory price of dichloromethane dispersed water fell to 2310 yuan/ton, down 18.67% from the first quarter high. The average price in the second quarter reached 2,513 yuan/ton.

The weak and volatile dichloromethane market in the first half of the year has a more direct relationship with the slow recovery of the demand side and the increase in supply.Under the strong expectation of economic recovery, the supply side took the lead, and the supply pressure was large in the first half of the year.In the first half of the year, there was no new production capacity in the domestic methane chloride industry, but since January, the profit space of production enterprises is good, and based on the expectation of economic recovery, the future market is generally optimistic, and the start-up load of enterprises remains high, resulting in the industry supply in the first half of the year at a high level in the same period. In the first half of 2023, the cumulative domestic production of dichloromethane was about 778.11 thousand tons, an increase of 97.52 thousand tons over the same period last year, an increase of 14.33%; The domestic methylene chloride industry load was 73.68%, an increase of 5.04 percentage points over the same period last year.

The recovery of domestic demand is weak, and exports are growing, but the support is limited

In terms of demand, the overall performance in the first half of 2023 is lower than expected, the downstream of the industrial chain, the main downstream refrigerant field demand is weak in the first half of the year, HFCs refrigerant in the 2020-2022 quota base year period, the industry supply continues to increase, the oversupply situation highlights, multi-product profits continue to flip, 2023, With the end of the HFCs quota base year, the production end has changed from "volume" to "profit", the enthusiasm for construction has declined, and the loss situation of HFCs refrigerant represented by refrigerant R32 will be reversed, but the overall profit is meager. In other downstream areas, the export demand of the pharmaceutical industry has weakened, affecting the enthusiasm of domestic enterprises to start work; The adhesive industry is affected by the downturn in terminal demand such as real estate, and the overall demand is declining; The operation of the automotive industry is facing greater pressure, and the demand of the lithium battery separator industry is weak in the first quarter, and it is in a slow recovery stage after the second quarter. From January to June, domestic dichloromethane consumption accumulated 642.96 thousand tons, an increase of 6.69%.

In the first half of the year, domestic dichloromethane exports were eye-catching, from January to May, domestic dichloromethane exports were 98.8 thousand tons, an increase of 27.51 thousand tons over the same period last year, an increase of 38.59%, and it is estimated that dichloromethane exports in the first half of the year will reach 112.35 thousand tons. In the first half of the year, the export volume of dichloromethane reached the highest level in the history of the same period, of which the export volume in April reached 25.85 thousand tons, which also hit a record high. Export growth in the first half of the year, for the stage of the market support is strong, but also to a certain extent to delay the market decline. Overall, the total domestic demand for dichloromethane in the first half of the year is expected to reach 755.31 thousand tons, an increase of 9.88%, but the growth rate of demand is far lower than the growth of supply, resulting in the oversupply of domestic dichloromethane market in the first half of the year.

Looking forward to the second half of the year, the policy side power or good demand side, the policy side drive the development of real estate, automobiles, home appliances and other industries in the second half of the year, superimposed gold nine silver ten economic recovery, will be transmitted to the demand for dichloromethane or improved, but the degree of improvement still needs to be verified, in addition, with the new capacity of dichloromethane industry, it is expected that the current situation of oversupply is difficult to be fundamentally improved. The continued high inventory situation in the industry will continue to exert a certain pressure on the market.

From the fundamental point of view, the dichloromethane industry continues to expand capacity in the second half of the year, and it is expected that the new capacity will be about 100 thousand tons/year, and the pressure on the supply side is still large. From the demand side, in the second half of the year, with the introduction of a number of policy measures to promote the continuous recovery of the economy, superimposed spontaneous restoration of the endogenous economic momentum, China's economy is expected to continue to improve marginal in the second half of the year, and the demand side is fed back to the dichloromethane market from the bottom up, but considering the current status of the main terminal areas of real estate, air conditioning and other industries. As well as the weak outlook for the global economy in the second half of the year, consumption in industries such as exports is expected to be difficult to fundamentally improve, limiting the incremental degree of demand for dichloromethane. In the second half of the year, the cost is expected to be mainly fluctuated upward, mainly due to the impact of the poor profit of chlor-alkali equipment, enterprises in order to increase profits, the willingness to sell liquid chlorine at a high price is strong, and the cost is expected to strengthen the market support. From the perspective of comprehensive fundamentals, the supply and demand of the dichloromethane industry in the second half of the year is expected to grow simultaneously, the superposition of costs is expected to strengthen, and with the arrival of the traditional peak season in September and October, the market is expected to improve.

The price of dichloromethane has obvious seasonal characteristics, and the probability of rising in September and October is high.The price fluctuation of dichloromethane has certain seasonal characteristics, of which the probability of rising in March, September and October is larger, mainly due to the increase in the consumption season of more than 70%, the second half of the November to December dichloromethane gradually into the consumption off-season, the market has a greater probability of falling. Combined with the characteristics of upstream and downstream operation, as well as the domestic economic repair process, it is expected that the dichloromethane market will continue to basically continue the above seasonal fluctuations in the second half of this year.

Based on the above analysis, the supply of dichloromethane industry continues to grow in the second half of the year, and demand is expected to improve, but the overall degree of improvement still needs to be seen, and the oversupply situation in the dichloromethane industry will continue. Continuing the trend forecast of the second half of the year in the "2022-2023 China dichloromethane Market Annual Report", it is expected that the dichloromethane market will bottom out in the second half of the year, and the demand will gradually recover from the end of the third quarter to the beginning of the fourth quarter. According to the seasonal law, the high probability of the second half of the year will appear in September to October, and the low point will appear in July to August. Mainstream price range or 2200-2800 yuan/ton.