Market Overview: Flash Crash and Restoration

After the Spring Festival, the dichloromethane market in Shandong experienced a sharp price drop, with a daily decline of up to 7.11%. It then quickly stabilized and rebounded continuously in the later part of the week, completing a rapid price reduction, inventory allocation, and price repair.
According to the Commodity Market Analysis System of Shengyi Society, as of February 27th, the mixed price of dichloromethane in Shandong region was 1720 yuan/ton, a decrease of 3.77% compared to before the Spring Festival.
Supply side: High inventory is one of the core causes of the market crash after the Spring Festival
During the Spring Festival, enterprises resumed normal production but logistics were suspended, resulting in continuous inventory accumulation. After the resumption of work after the holiday, inventory pressure was concentrated and released. Most production enterprises chose to actively reduce prices and reduce inventory, directly leading to a daily decline of over 7%. When low-priced goods quickly digest inventory, inventory pressure is relieved, and the enterprise’s pricing sentiment is heated up, the quotation gradually tentatively increases. Part of the main equipment in Shandong has been restored, and the industry’s operating rate has rebounded to around 80%.
Demand side: Triple factor resonance, concentrated release of bottom fishing demand
Post holiday stock replenishment: Downstream factories and traders gradually resume work and production after the Spring Festival, and there is a rigid demand for replenishment.
Bottom fishing mentality: After the price fell to a low point this year, it greatly stimulated the stocking willingness of intermediaries and some downstream users, significantly increased market trading volume, and formed an effective pallet force.
Export support: The stable execution of overseas orders also provides an important channel for digesting domestic surplus production, accelerating the process of inventory depletion.
Cost side: Weakening bottom support to make room for price
Liquid chlorine: Inventory in some areas of the Shandong liquid chlorine market remains high, and downstream production has not fully recovered yet. The trend of the liquid chlorine market has declined, and the ex factory price of tank trucks has fallen below 1 yuan/ton. The collapse of liquid chlorine prices has directly weakened the bottom line of cost support for methane chloride enterprises, providing space for enterprises to lower prices and make concessions.
Methanol: The sentiment in the methanol market is weak, with high supply pressure and cautious downstream delivery, resulting in short-term pressure on the market. On February 27th, the benchmark price of methanol in Shengyi Society was 2185.83 yuan/ton, a decrease of 0.7% compared to before the Spring Festival, and the impact on the cost of dichloromethane was relatively limited.
Future outlook:
The current market is in a game stage of “low inventory, recovery of essential demand, and weak cost”. With the full resumption of downstream construction after the Yuanxiao (Filled round balls made of glutinous rice-flour for Lantern Festival) Festival, demand is expected to continue to release smoothly. It is expected that the dichloromethane market in Shandong will maintain a strong and volatile pattern in the short term. However, in the absence of strong support from the cost side, the potential for rebound in the future requires close attention to the downstream’s response to the current price increase and the inventory changes of major manufacturers.