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Dimethyl carbonate enters a downward trend Author/Source: Sinochem New Network Date: 12-11-2020 Clicks: 40 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, as December arrived, the dimethyl carbonate market experienced a significant downturn, with prices falling by 2,000 yuan per ton compared to the end of November (prices are given per ton, the same applies hereafter). Industry experts believe that going forward, as the support from raw materials weakens, demand enters a slack 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 supplies; as a result, the price of dimethyl carbonate rose above 11,500 yuan per ton. However, as December arrived, the plants that had been shut down earlier, such as Shandong Weiers, Anhui Hong Sifang, and Shandong Depu, resumed operation. 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. Currently, the on-site installations are operating normally, with no maintenance plans in place for the time being; the risk of a market supply shortage 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 period for the large manufacturer Jinling Huntsman in East China further intensified this bearish attitude. 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 persistent desire on the part of end-users and downstream industries to restock at lower levels. Once the price of propylene oxide in Shandong drops to 14,000 yuan per ton, downstream companies will take advantage of this low price to make purchases, while end-users will also concentrate on restocking after some initial hesitation. 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 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 price surge, downstream players have become increasingly cautious. After new orders for polyether continued to decline, they further reduced their purchasing activities. Since then, the market atmosphere has cooled down, and currently the price of propylene oxide in Shandong is around 16,800 yuan. “Looking ahead, propylene oxide margins remain relatively high. Currently, downstream demand remains at a basic level in the short term, with continued purchases taking place. 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 off-peak periods. 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 “**Proposals of the CPC Central Committee on Formulating the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035**” reiterates that “we must uphold the principle that housing is 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 real estate trends, indicates that its role as a key downstream market for dimethyl carbonate has been affected. 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 against the backdrop of the current off-season, although the price of dimethyl carbonate has declined somewhat, it remains at a high level. Market sentiment is predominantly bearish, with a strong sense of wait-and-see among market participants. To alleviate cost pressures, most manufacturers purchase coal-derived dimethyl carbonate or modify 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, currently, due to high costs, some manufacturers in the polycarbonate industry make purchases only as needed. The Zhejiang Iron and Steel large-scale 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 Lutianhua purchase dimethyl carbonate as needed, with the rest opting to wait and observe the market situation. 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 for the lithium battery electrolyte industry, high-purity carbonates are in constant demand by enterprises; however, this fails to provide significant support for dimethyl carbonate.