Geopolitical risks dominated the dichloromethane market in the first half of 2026 and triggered a sharp price rally, while supply-demand fundamentals took over market pricing after April. Throughout the whole year, the sector is trapped in structural oversupply, weak downstream consumption and squeezed corporate margins. This blog systematically sorts out H1 market performance, supply & demand data, export obstacles, and the latest second-half outlook for methylene chloride, serving as a reference for chemical traders, manufacturers and downstream processors.
As a universal industrial solvent, high-purity dichloromethane is widely used in paint stripping, pharmaceutical API extraction, metal degreasing, polyurethane foaming and aerosol production. Professional product specifications, packaging and industry certificates can be viewed at Achilles Chem Methylene Chloride Product Page.
H1 2026 Dichloromethane Price Trend: Geopolitical Rally Followed by Rational Correction
Overall Price Range & Year-on-Year Comparison
The domestic DCM market opened low and surged upward in the first six months of 2026. Shandong mainstream average price stood at 2,089 yuan/ton, up 11.83% against H2 2025.
• Full H1 fluctuation band: 1,630–3,250 yuan/ton, amplitude reaching 99%
• Trough: End of February at 1,630 yuan/ton
• Peak: Mid-March at 3,250 yuan/ton
By contrast, the price swing range only hit 40% in the same period of 2025, showing unprecedented volatility this year.
March Explosive Surge Driven by Middle East Geopolitics
The most dramatic market fluctuation arrived in March, powered by two upstream cost drivers:
1. Escalating Middle East geopolitical conflicts pushed methanol prices sharply higher;
2. Liquid chlorine quotations rose simultaneously, delivering strong cost support for DCM.
Fears of raw material shortages prompted manufacturers to raise factory prices, lifting spot prices nearly 90% to the annual peak of 3,250 yuan/ton.
However, geopolitical risk premiums faded rapidly after mid-March: high prices suppressed downstream purchasing willingness, factory inventories accumulated, and macro sentiment cooled down. Market logic shifted from cost-driven rally to supply-demand consolidation, entering a phase of high-level oscillation and rational price fall.
H1 2026 Supply Side Analysis: Expanded New Capacity & Persistently High Operating Rates
New Capacity Release Volume
New methane chlorides capacity of 360,000 tons went online at end-April 2026, representing an 8.47% increase compared with H2 2025. No outdated backward capacity has been eliminated so far, continuously aggravating the industry’s oversupply structure.
Plant Operation Rate & Output Data
• Average H1 operating rate: 79.50%, down 1.28 percentage points from H2 2025, yet up 2.12 percentage points year-on-year vs 2025 H1
• H1 total DCM output: 964,700 tons, a slight drop of 0.78% versus last half-year
Two core reasons for limited output growth despite high startup loads:
1. Sustained high upstream chloride costs forced cost-triggered periodic maintenance across factories;
2. Severe overcapacity pushed manufacturers to adopt production curtailment to stabilize prices and protect profits.
Even under sustained losses, fixed costs and integrated chlorine digestion restrict large-scale production cuts, resulting in insufficient supply elasticity. Industry operating rates will maintain a medium-high range of 70–80% in the long run.
Current Industry Operating Dilemma
The methane chlorination sector faces dual pressures of volatile raw material costs and stagnant demand, forming a fixed market pattern: high supply, weak demand, low profit margin, and obvious enterprise differentiation. Spot prices now adjust frequently within narrow ranges without sustained big moves.
Downstream Demand Performance: Refrigerant & Air-Conditioner Terminal Consumption Weakened
Refrigerant R32 Market Downturn
R32, the largest downstream consumption sector of DCM, recorded H1 output of 130,800 tons, a 14% year-on-year decrease. Key drag factors:
1. Regular maintenance of supporting R32 facilities lowered overall industry operating loads;
2. Early air-conditioner production & sales season slowed inventory digestion for terminal manufacturers, weakening refrigerant restocking demand;
3. Overseas local refrigerant capacity expansion diverted import orders, slashing domestic raw material purchasing volume.
Air-Conditioner Terminal Output Decline
National air conditioner cumulative output for H1 2026 is projected at 118–120 million units, falling 5%–8% year-on-year. Weak terminal consumption forms long-term bottom pressure limiting DCM price rebounds.
Export Market: Red Sea Logistics Crisis Hit Overseas Shipments
H1 2026 estimated DCM export volume: 103,300 tons, down 4.44% month-on-month against H2 2025 and 1.81% year-on-year.
China’s methylene chloride major export destinations include Turkey, Vietnam and the UAE, with the Middle East ranking as the second-largest overseas market after Southeast Asia.
March geopolitical turbulence in the Red Sea and Strait of Hormuz triggered severe export disruptions:
• Global shipping schedules widely delayed;
• Ocean freight rates jumped sharply;
• Multiple shipping lines suspended relevant routes and refused chemical cargo bookings.
Middle East order volume shrank drastically in Q1, with large quantities of export goods forced back to domestic warehouses, directly dragging down total half-year export data.
H2 2026 Market Outlook: New Capacity Negative Pressure & Narrow Volatility Range
Upcoming New Production Capacity Risks
Large-scale methane chloride facilities including Baotou Yonghe and Gansu Juhua, with total annual capacity of 11 million tons, are scheduled to launch successively, mostly concentrated in Q4 2026 — the core bearish factor restraining market upward space in the second half.
Restrictions on New Capacity Output Release
Q4 commissioning faces multiple constraints limiting actual supply release:
1. Northern winter public works supporting limitations;
2. Cold-season logistics transportation obstacles;
3. Year-end downstream purchasing slowdown.
New plants will only operate under low initial loads, so the incremental supply impact on 2026 spot market is limited. The new capacity mainly suppresses market bullish expectations and caps the height of price rebounds rather than triggering a sharp spot slump within the year.
Comprehensive H2 Market Judgment
Domestic DCM supply will maintain high baseline operating rates of existing units, with short-term tightening windows only emerging during periodic factory maintenance. The incremental pressure from Q4 new capacity mainly reflects long-term market sentiment rather than instant spot shock.
Under the overall weak supply-demand balance, the domestic dichloromethane market in H2 2026 will feature frequent short-term price swings without sustained unilateral bullish or bearish trends. Liquid chlorine raw material costs will offer mild bottom support, and price fluctuation amplitude will remain narrow with more frequent minor adjustments.
Conclusion
2026 H1 DCM market was defined by one-off geopolitical hype and subsequent fundamental regression, while the second half will return to oversupply logic dominated by new capacity expectations and soft downstream consumption. Industry participants need to track quarterly maintenance schedules, air-conditioner terminal inventory data and Red Sea shipping conditions to capture short-term trading windows.
For stable, high-purity methylene chloride supply with full industrial certification covering paint stripping, pharmaceutical synthesis and precision metal cleaning, visit Achilles Chem’s DCM product introduction page to check specifications, packaging and global export service cases.
