According to the Business Society Spot News, in the first half of May, the industrial grade dimethyl carbonate (DMC) market showed a sustained downward trend and low-level oscillation pattern. As of May 13th, the average price of industrial grade dimethyl carbonate in China was 3833 yuan/ton, a decrease of 2.54% from the beginning of the month. The overall market is running weakly, with significant pressure on fundamentals, and the technical side has entered the stage of oversold and bottoming out.
Fundamental analysis
Supply side: Device restart, high inventory
After the holiday, work resumed and multiple sets of equipment were restarted. The industry’s operating rate rebounded to over 66%, and the circulation of spot goods increased, resulting in an overall loose supply.
Enterprises have accumulated inventory and have a strong desire to reduce inventory, resulting in widespread discounts on shipments.
Demand side: Strong demand as the main factor, cautious procurement
Electrolyte: Terminal new energy orders are flat, and electrolyte factories purchase on demand and significantly lower prices, resulting in a decrease in procurement volume compared to the previous period.
Polycarbonate (PC): The industry has high production capacity, low profits, and insufficient operating rates, resulting in continued weak demand for DMC.
Traditional demand (coatings, adhesives): urgent need for replenishment, heavy mentality of price suppression, and mainly low-priced source transactions.
Export: Closing of previous orders, insufficient follow-up of new orders, and weakened export contribution.
Cost aspect: Weak raw materials and insufficient support
Epoxy propane (PO):
Cost support failure: When PO prices rise, DMC does not follow suit, indicating that weak demand makes it difficult for companies to transmit cost pressure and can only passively offer discounts for shipments.
Cost Downward Release Space: The significant drop in PO in the later stage further compressed the cost bottom line of DMC, providing space for further price declines, while also causing high cost devices to lose their upward momentum.
Methanol:
The significant decline in methanol prices has directly lowered the production cost of coal to DMC, causing low-priced sources to impact the market and intensifying the price war.
The decrease in DMC is smaller than that of methanol, indicating that the cost advantage brought by the decline in methanol has not been converted into corporate profits, but has been entirely given to downstream customers.
Market forecast:
Short term low-level bottoming is the main trend, and technical rebound is expected.
The current market fundamentals are still weak, with loose supply and difficulty in concentrating and increasing demand, making it difficult for the market to form a trend driven surge; However, the downward momentum in technology has weakened, prices are at a low level throughout the entire cycle, and coupled with spot prices approaching the industry’s production cost line, high cost equipment is expected to reduce production and limit production, and bottom support is gradually emerging. It is expected that in the second half of May, industrial grade dimethyl carbonate will mainly bottom out with low-level fluctuations. There is a technical opportunity for a slight rebound at this stage, but the rebound strength is limited. The upper part is suppressed by the moving average and trading sentiment, and it is difficult to have a significant upward trend.
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