1、 Price trend

According to the Commodity Market Analysis System of Shengyi Society, as of July 29th, the average quotation price of domestic high-quality DMF enterprises was 4016 yuan/ton. The overall market price of DMF showed a continuous downward trend in July, and rebounded slightly at the end of July. Under cost pressure, manufacturers have a low willingness to offer discounts. DMF prices in July have hit a new historical low, and the overall market needs to be maintained. At the beginning of July, DMF enterprises had more equipment parking and less supply on site. After a brief upward trend, prices continued to decline, and the weak market continued to rebound at the end of July, with a slight rebound.

2、 Cause analysis

In terms of cost, DMF’s main upstream product, liquid ammonia, showed a significant decline in early July. The market transaction atmosphere was weak, and the trading atmosphere did not improve. The overall market price continued to consolidate weakly, with a small amount of shipments being the main focus. The downstream market demand was sluggish, and the mentality of first-time buyers was pessimistic and cautious. Ammonia companies adjusted their prices according to their own situation. Currently, the overall market supply is relatively sufficient, and the operating rate is stable. It is expected to fluctuate in the short term, with upstream methanol showing a weak downward trend. The spot market is under pressure, and the good news of the equipment is exhausted. Downstream demand continues to not improve, and port inventory continues to increase, rising to historical highs. The supplier’s supply is sufficient, and the overall market’s buying gas is insufficient, causing prices to fall accordingly. Double Upstream prices are weakly declining, and DMF lacks positive support on the cost side.

In terms of demand: July is the off-season for DMF, and downstream agricultural demand is mainly for essential purchases after September. The market transaction atmosphere is insufficient, and it is difficult to boost terminal demand. The pressure on enterprise inventory is high, and the downstream market is developing slowly. The situation of oversupply is obvious. Currently, the profitability of the industry is not optimistic, and some small and medium-sized enterprises can only suspend production indefinitely to cope with the current high inventory and difficult inventory situation. Downstream demand has rebounded at the end of July, and the operating rate of DMF enterprises has declined. The terminal receiving sentiment has not improved significantly.

In terms of production capacity: DMF has gradually increased in recent years and entered a stage of rapid growth. In the past three years, the production capacity growth rate has reached 94.5%. The total domestic DMF production capacity has grown from 910000 tons/year to 1.77 million tons/ton in the past three years, which is close to doubling. However, the development of downstream areas is slow, lacking support from new industries, and the demand follow-up is weak, resulting in the DMF market being in a situation of overcapacity. From 2020 to 2022, DMF prices soared from 10000 yuan to nearly 20000 yuan, and industry profits remained high. Many manufacturers have started to put into production facilities and concentrate production. With the significant increase in production capacity, the situation of oversupply in the market has emerged, The price of DMF continued to decline, and factories began to indefinitely shut down. In the first half of 2024, only one company received news of equipment being put into operation, while many small and medium-sized enterprises received news of parking, resulting in inventory backlog, difficulties in inventory clearance, and intensified market pressure and competition. However, companies can only alleviate their existing inventory pressure by shutting down production.

In terms of inventory: In July, DMF factory inventory was mainly consumed in a narrow range, with slow release of terminal demand and overall weak sales sentiment. Downstream manufacturers maintained their previous production levels, with stable operating rates and limited demand for DMF. Currently, there are still several companies whose equipment has been shut down and the opening time has not been specified. The supply in the factory has slightly decreased, and downstream manufacturers are cautious.

3、 Future forecast

DMF analysts from Shengyi Society believe that the DMF market has been experiencing narrow fluctuations recently, with a slight rebound in prices. Currently, the mentality of industry players is somewhat average, mainly cautious and cautious in purchasing for essential needs. Upstream methanol has stopped falling and stabilized, and port performance is relatively strong. The current supply and demand situation has improved, and DMF has received positive support on the cost side. It is expected that DMF prices will mainly operate strongly in the short term, with a price increase range of 30-50 yuan/ton. The mainstream market quotation is around 4000 yuan/ton.