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Dimethyl Carbonate: Second Quarter Review Third Quarter Outlook
Jun 28, 2018

Beginning in the second quarter of 2018, dimethyl carbonate began to descend from the low to the high point of the year. On the whole, the average price rose slightly from the first quarter, with an increase of 2.2%. The reason for the price increase of DMC was mainly due to the continuous and substantial increase in raw material C coming back after the Ching Ming Festival. Under cost pressures, the DMC factory operated with it at a high price. Part of the initial price increase and traders can still accept orders, the demand warmed from the previous period, DMC factory inventory decreased, began to reluctant to sell at low prices, control volume delivery. DMC factory inventory pressure is not obvious, coupled with some factories released in late April early May to focus on maintenance information, the factory reluctant to sell more sentiment. In the month, the raw materials of the cyclohexane station rose by as much as 11.3%. However, when the DMC price pushed up to a high level, the downstream resistance increased, and the DMC continued to fall back at the end of April. The supply side is very loose. DMC's main downstream paint and coating industry is affected by coal-based DMC. The traditional transesterification method is weak and the demand is entering the traditional off-season as the temperature keeps rising. It was even more unfavorable to make weak downstream orders. Under the influence of terminal shipments and environmental pressures, the downstream plant started with a lower load, and the drop in the raw material of cyclopropane in May caused the downstream DMC to be unstable. Although there was a slight rebound during the period, there was little impact on the DMC's profit margin.

In the third quarter, July and August are still in the low season of demand, and environmental protection hasn't passed. The downstream operating rate is not high. In addition, the low price impact of coal-based DMC, such as the main transesterification method and the downstream paint coating adhesives, is heavy. The demand for traditional DMC is greatly reduced, and the demand side is still an important bearer factor in the market. From the supply side, Depco and Haike follow-up devices are all started. In the event that the follow-up DMC still has profit margins, it is expected that the decrease in the operating rate will be less likely and the overall supply will be sufficient. With the expected launch of domestic propylene oxide and the expected demand for “Jin 9 Silver 10”, the market supply and demand will play against each other. It is expected that the market will not have any substantial positive support for the market to rise in July-August, but it will be accompanied by tradition in September. Driven by demand, market sentiment may have improved, but new production capacity of Hong Baoli and CITIC Guoan has been actively released in September, and new production capacity in South Korea is expected to be launched into China in the fourth quarter. The increase in market supply has depressed the confidence of industry players. This year, "Jinjiuyinshi" has no more optimistic expectations. In the third quarter, raw material cyprosin has no significant support for the DMC market. As a whole, short positions in the market are still biased. It is expected that the DMC will maintain its weakness in the third quarter or more.