In the first week of April, methylene dichloride (MDC) prices witnessed a slight uptick driven by restocking activities following the Qingming Festival. MDC prices in China then declined significantly during the second and third weeks of April amid weak downstream demand, low-cost support, and increasing inventory pressure. After the Qingming Festival, there were no more rounds of downstream replenishment, resulting in less purchasing in many important consumption markets. With weak cost support from upstream feedstocks, manufacturers started offering small price discounts to facilitate their continuing destocking process.

The downstream market in pharmaceuticals, pesticides, and solvents (like adhesives and coatings) was risk-averse, simply buying what they needed. The refrigerant market, the largest end-use for MDC, where it is consumed as a feedstock for R32 production, is still in a seasonal lull, although it is expected that demand will improve dramatically as we approach the air conditioning production peak that occurs in May and June. Until then, it will remain below peak activity levels.

The cost dynamics for MDC presented positive and negative trends in the market. From a technical standpoint, methanol (a primary feedstock) faced significant weakness in its performance due to bearish macro sentiment and reduced demand. While liquid chlorine pricing has been in an upward trend recently, the overall effect on MDC's production is minor at this time.

The supply side of the equation showed some mixed signals. While several methane chloride production units in Shandong are in maintenance or are reduced to maintenance loads, causing the overall operating rate to be approximately 75%, the supply levels still appear appropriate. However, stock levels have built up with most of the big suppliers of MDC. Also, inventory levels have put pressure on sellers to work toward lowering their prices of MDC to entice purchases and help rebalance the market.

On the external front, weak export activity, compounded by off-season dynamics and reduced global demand, helped little. The imposition of U.S. tariffs on Chinese goods has had little immediate effect on MDC, given that shipments to the U.S. account for only 0.63% of total export volumes (based on 2024 data).

As per ChemAnalyst, the near-term future suggests MDC prices will continue to exhibit weak fluctuations. Market participants have been closely monitoring methanol prices, the pace of inventory consumption, and potential signals of downstream restocks as we head towards the peak refrigerant season in May. If demand returns to pre-pandemic normal levels as expected in May, the market may stabilize and potentially get back on track.