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Dimethyl carbonate enters a downward trend Author/Source: Sinochem New Network Date: 12-11-2020 Clicks: 12 The dimethyl carbonate market had a good start in the fourth quarter, with prices even reaching new highs for the year; despite some fluctuations along the way, it managed to remain at high levels. However, entering December, the dimethyl carbonate market experienced a significant decline, with prices falling by 2,000 yuan per ton compared to the end of November (prices are given per ton, the same below). Industry experts believe that going forward, as the support from raw materials weakens, demand enters a low season, and supply remains abundant, the dimethyl carbonate market is set to move downward. Sufficient supply available for device restarts. Wang Ningning, an analyst at Jinlianchuang, explained that at the beginning of October, the price of dimethyl carbonate continued to rise, reaching over 14,000 yuan; thereafter it dropped to around 9,000 yuan. In November, as some facilities of the manufacturers were temporarily shut down due to environmental inspections, the industry’s operating rate remained low, leading to a shortage of supply and pushing the price of dimethyl carbonate above 11,500 yuan per unit. However, as December arrived, the plants that had been shut down earlier, such as Shandong Wells, Anhui Hong Sifang, and Shandong Depu, resumed operations. Coupled with the normal operation of Zhejiang Petrochemical’s 200,000 tons per year plant, inventory levels of dimethyl carbonate gradually increased. As a result, the bidding prices for end-users dropped significantly, exacerbating bearish sentiment in the market and leading to a sharp decline in prices; almost none of the previous price increases remained. “In November, the overall operating rate of dimethyl carbonate was around 60.91%, and it is expected to remain at around 70% in December due to the restart of production facilities. At present, the equipment on-site is operating normally, with no maintenance plans at the moment; the risk of a shortage in market supply has been largely eliminated. ”Wang Ningning analyzed. Furthermore, there are reports that another 50,000 tons per year production facility owned by Red Square is scheduled to come online by the end of December or early January next year; this will further increase the supply of dimethyl carbonate and may continue to put pressure on the market. Weak raw material conditions support weak performance. In terms of raw materials, the domestic propylene oxide market showed a downward trend in November before picking up again, only to decline once more by the end of the month. With the news of the commissioning of the Jishen plant at the end of October, a bearish sentiment prevailed in the market. Additionally, the slightly extended shutdown for maintenance at the large manufacturer Jinling Huntsman in East China further intensified this bearish atmosphere. With reduced purchasing volume downstream, the market began to decline. Factories focused on negotiating shipments, and low prices appeared frequently, which quickly pulled down the market level and led to a sharp drop. Chen Xiaohan, an analyst at Zhongyu Information, believes that there is a continuous desire on the part of end-users and downstream industries to stock up at lower prices. Once the price of propylene oxide in Shandong drops to 14,000 yuan per ton, downstream companies will buy in at these lower prices, and after some hesitation, end-users will also proceed with bulk purchases. Polyether plants received a large number of orders, and coupled with Huntsman’s scheduled maintenance on November 10, supply became tight in the East China market. As the inventories of propylene oxide plants were quickly depleted, shipments were limited, which led to an increase in prices. The rise was just as rapid as the previous decline, and prices once again reached their highs for the year in a short period of time. Due to this rapid rise, fear among downstream buyers is increasing; as new orders for polyethers continue to decline, these buyers are reducing their purchases further. Since then, the market atmosphere has cooled down, and currently the price of propylene oxide in Shandong is around 16,800 yuan. “Looking ahead, the profits associated with propylene oxide remain high; at present, there is ongoing demand from downstream industries, leading to continued purchases. Inventory levels at propylene oxide plants are under control, but new orders have declined and demand is weak; therefore, market gains are expected to slow down in the short term. In the medium to long term, a downward trend may emerge, which will reduce the support provided by dimethyl carbonate in terms of costs. ”Chen Xiaohan analyzed. It is difficult to sustain demand during the off-season. The main end-use sectors for dimethyl carbonate include industries such as coatings and adhesives, and their performance is closely linked to the real estate market. The **Central Committee’s Recommendations on Formulating the 14th Five-Year Plan for National Economic and Social Development and the Long-Term Goals for 2035** continue to state that \"we must adhere to the principle that houses are meant for living in, not for speculation.\" ”The poor performance of the coating market, an important end-use sector for dimethyl carbonate that is closely linked to the real estate market, also indicates that its role as a key downstream user of dimethyl carbonate is under threat. Chi Baochun, a paint distributor, said that the high price of dimethyl carbonate has led to a decline in demand from downstream users, resulting in weak purchasing activity. Especially in the current off-season, although the price of dimethyl carbonate has declined, it remains high. The market is generally bearish, with a strong tendency to wait and see. To reduce cost pressures, most manufacturers purchase coal-based dimethyl carbonate or change their formulations. This is particularly evident in the South China market, where there is little interest in dimethyl carbonate produced by the transesterification method, with few inquiries for it. Polycarbonate and lithium battery electrolytes have become the new main end uses for dimethyl carbonate. However, due to high costs in the current polycarbonate industry, some manufacturers purchase materials as needed. The Zhejiang Railway Da Feng polycarbonate plant is equipped with a corresponding dimethyl carbonate production facility; even at full capacity, it still needs to purchase 600–800 tons of dimethyl carbonate from external sources. Lihua Yi’s polycarbonate plant conducts regular small-scale tenders on a weekly basis, while plants in Puyang and Luzhou Tianhua purchase dimethyl carbonate as needed, with the rest opting to wait and observe before making decisions. The current operating rate in the polycarbonate industry is low, as manufacturers are waiting for the price of dimethyl carbonate to drop. As a raw material in the lithium battery electrolyte industry, high-purity carbonates are in high demand by companies, which makes it difficult to provide strong support for dimethyl carbonate.