In the first three week of March, the Methylene Dichloride (MDC) market in China experienced fluctuations, influenced by varying demand patterns, supply conditions, and market sentiment.

Key Takeaways:

• In the first week of March, MDC prices in China held constant on stable supply and slight downstream demand.
• Prices dropped in the second week due to poor demand, higher inventory levels, and reduced shipments.
• In the third week, prices increased, driven by the customary maintenance turnarounds along with a recovering refrigerant market.
• Seasonal demand trends and industrial activity are expected to shape MDC market movements in the coming weeks.

In China, MDC prices remained stable in the first week of March following previous price increases. Improved manufacturing activities delivered a consistent supply of products to the market, which aided stability in the markets. The domestic methanol market remained volatile due to strong downstream olefin inquiry and outside mining influences. Likewise, the liquid chlorine market remained stable, which added further balance to production costs.

On the demand side, several key downstream sectors have started to gradually improve. The pharmaceutical markets have been steadily growing with new drug approvals and a continual pipeline of innovation. The paints and coatings sector were stable, supported by seasonal demand. The automotive markets remain stable with a 39.4% increase in year-on-year vehicle sales, contributing to stable MDC demand.

In the second week of March, MDC prices decreased in China, mainly due to slow downstream demand. Additionally, adverse weather conditions prevented enterprises from shipping products, leading to a buildup of inventories, leading firms to initiate cuts in quotation prices to relieve shipment constraints. Some manufacturers announced maintenance shutdown plans during the period, which may impact supply in the upcoming weeks.

Market sentiment remained mixed, as the expectation of seasonal demand recovery kept firms focused on maintaining minimal essential procurement volumes. Short-term demand remains weak, although market participants remain optimistic in a gradual demand recovery, as industries digest through seasonal conditions.

In the third week of March, MDC prices levels jumped in China due to fluctuations in market sentiment after a couple of key enterprises announced planned maintenance. This news raised supply concerns and established a strong upward momentum in the market. On the cost side, feedstock methanol prices rose slightly, providing some upward pressure on the production costs for MDC.

Downstream demand showed signs of improvement, with downstream firms moving toward essential procurement. The refrigerant side of the supply chain, particularly R32 production, improved significantly, running at the expected 90% level. The stable upward trend in R32 prices will likely provide additional price momentum for MDC in the upcoming weeks.

According to ChemAnalyst, Prices for MDC may strengthen somewhat due to maintenance shutdowns impacting supply and seasonal demand strengthening. Price movements will depend on further progress in the recovery of key downstream sectors and unexpected changes in production levels.