China’s Dichloromethane Market Hits Five-Year Low Amid Oversupply

BEIJING, July 16, 2025 – China’s dichloromethane (DCM) market experienced a significant downturn in the first half of 2025, with prices plunging to a five-year low, according to industry analysis. Persistent oversupply, driven by new capacity expansions and lacklustre demand, defined the market landscape.

Key H1 2025 Developments:

Price Collapse: The average bulk transaction price in Shandong fell to 2,338 RMB/ton by June 30th, down 0.64% year-on-year (YoY). Prices peaked at 2,820 RMB/ton in early January but plummeted to a low of 1,980 RMB/ton in early May – a fluctuation range of 840 RMB/ton, significantly wider than 2024.

Oversupply Intensifies: New capacity, notably the 200,000 tons/year methane chloride plant in Hengyang starting in April, pushed total DCM output to a record 855,700 tons (up 19.36% YoY). High industry operating rates (77-80%) and increased DCM production to offset losses in co-product Chloroform further exacerbated supply pressure.

Demand Growth Falls Short: While core downstream refrigerant R32 performed well (driven by production quotas and strong air-conditioning demand under state subsidies), traditional solvent demand remained weak. Global economic slowdown, Sino-US trade tensions, and substitution by cheaper ethylene dichloride (EDC) dampened demand. Exports grew 31.86% YoY to 113,000 tons, providing some relief but insufficient to balance the market.

Profitability High but Falling: Despite falling DCM and Chloroform prices, average industry profit reached 694 RMB/ton (up 112.23% YoY), supported by drastically lower raw material costs (liquid chlorine averaged -168 RMB/ton). However, profits shrank sharply after May, dipping below 100 RMB/ton in June.

H2 2025 Outlook: Continued Pressure & Low Prices

Supply to Grow Further: Significant new capacity is expected: Shandong Yonghao & Tai (100,000 tons/year in Q3), Chongqing Jialihe (50,000 tons/year by year-end), and the potential restart of Dongying Jinmao Aluminum (120,000 tons/year). Total effective methane chloride capacity could reach 4.37 million tons/year.

Demand Constraints: R32 demand is expected to soften after strong H1. Traditional solvent demand offers little optimism. Competition from low-priced EDC will persist.

Cost Support Limited: Liquid chlorine prices are forecast to remain negative and weak, offering little upward cost pressure, but potentially providing a floor for DCM prices.

Price Forecast: The fundamental oversupply is unlikely to ease. DCM prices are expected to remain range-bound at low levels throughout H2, with a potential seasonal low in July and high in September.

Conclusion: The Chinese DCM market faces sustained pressure in 2025. While H1 saw record output and profits despite plunging prices, the H2 outlook points to continued oversupply growth and muted demand, trapping prices at historically low levels. Export markets remain a crucial outlet for domestic producers.


Post time: Jul-16-2025