Double suppression of production capacity and trade barriers: the deep dilemma and cyclical review of the dichloromethane industry Double suppression of production capacity and trade barriers: the deep dilemma and cyclical review of the dichloromethane industry
Preface: Jump out of technology and market conditions to understand the underlying industrial lesions of the DCM industry Preface: Jump out of technology and market conditions to understand the underlying industrial lesions of the DCM industry
Most chemical industry analysis only focuses on the physical and chemical properties, safety control, and short-term price fluctuations of dichloromethane, but ignores the majority of chemical industry analysis that restricts the development of the industry for more than a decade. It only focuses on the physical and chemical properties, safety control, and short-term price fluctuations of dichloromethane, but ignores the core and underlying contradictions that restrict the development of the industry for more than a decade: structural overcapacity + high export dependence + normalization of international trade barriers. The reason why dichloromethane has been caught in the industry dilemma of "unsustainable price increases, no bottom line for price falls, meager profits, and serious involution" for a long time is not a process problem, not a short-term fluctuation in demand, but an inevitable result of the superposition of industrial structure imbalance and international trade game... The reason why dichloromethane has been caught in the industry dilemma of "unsustainable price increases, no bottom line for price falls, meager profits, and serious involution" for a long time is not a process problem, nor a short-term fluctuation in demand, but an inevitable result of the superposition of industrial structure imbalance and international trade game.This article jumps out of the perspective of traditional security, physical properties, and spot market. With this article jumping out of the perspective of traditional security, physical properties, and spot market, it takes industry cycle, production capacity iteration, domestic and foreign trade pattern, anti-dumping trade war, industry survival logic, industry cycle, production capacity iteration, domestic and foreign trade pattern, anti-dumping trade war, and industry survival logic as the core, and deeply disassembles the long-term stubborn disease of the dichloromethane industry, explaining its special industry attributes of "smooth export will lead to industry recovery, and hindered export will reveal its original form".
1. Industry original sin: extensive expansion buries permanent overcapacity hidden dangers 1. Industry original sin: extensive expansion buries permanent overcapacity hidden dangers
All the difficulties of the domestic dichloromethane industry are rooted in all the difficulties of the domestic dichloromethane industry, and the root cause is Disorderly follow-up expansion Disorderly follow-up expansion . The domestic DCM industry started late, and basically relied on imports before the 1990s. After 1990, Zhejiang Qinhua introduced a 30,000-ton/year methanol production plant for the first time, marking the official start of domestic dichloromethane production. In the early stage of localization substitution, domestic production capacity was scarce, demand was stable, and profits were huge. The industry ushered in the first round of profiteering cycle, which also directly triggered the subsequent two decades of brutal expansion tide... The domestic DCM industry started late, and basically relied on imports before the 1990s. After 1990, Zhejiang Quhua introduced a 30,000-ton/year methanol production plant for the first time, marking the official opening of domestic dichloromethane production. In the early stage of localization substitution, domestic production capacity was scarce, demand was stable, and profits were huge. The industry ushered in the first round of profiteering cycle, which also directly triggered the brutal expansion of production in the following two decades.
Consistent with most fine chemical industries, the DCM industry exhibits a typical cycle of "boom expansion, excess internal volume, and loss stalemate". In 2012, the industry's overcapacity problem has been fully exposed, and the average operating rate of the whole industry has dropped to about 50%, which means that half of the domestic production capacity is in idle, wasteful, and inefficient operation, and the supply and demand structure is seriously unbalanced. However, the industry did not rationally control production, but continued to up the ante under short-term stimulus. Consistent with most fine chemical industries, the DCM industry presents a typical cycle of "boom expansion, excess internal volume, and loss stalemate". In 2012, the problem of overcapacity in the industry has been fully exposed, and the average operating rate of the whole industry has dropped to about 50%, which means that half of the domestic production capacity is idle, wasteful and inefficient, and the supply and demand structure is seriously unbalanced. However, the industry did not rationally control production, but continued to up the ante under the short-term market stimulus.
In 2014, the prosperity of the refrigerant industry rose, driving the short-term explosion of demand for dichloromethane, the recovery of market prices, and the recovery of corporate profits. The short-term industry dividend made the market ignore the risk of long-term excess. A large number of enterprises invested against the trend and centrally planned new devices, laying the fatal foreshadowing for the industry collapse in 2015. In 2014, the prosperity of the refrigerant industry rose, driving the short-term outbreak of demand for dichloromethane, the recovery of market prices, and the recovery of corporate profits. The short-term industry dividend made the market ignore the risk of long-term excess. A large number of enterprises invested against the trend and centrally planned new devices, laying the groundwork for the fatal collapse of the industry in 2015.
2015 has become a key year for the centralized release of production capacity. A number of new large-scale plants have been put into operation, completely subverting the supply and demand pattern of the whole country and even South China: Ruyuan East Sunshine 50,000 tons/year plant has been put into operation, Jiangxi Liwen has added 40,000 tons of production capacity, and Guangxi Tiandong Jinyi 100,000 tons/year new plant has been launched, completely ending the history of no local production enterprises in South China. The regional supply has changed from "shortage of supply" to "supply is seriously greater than demand", regional competition has intensified, and the price has been fully opened. 2015 became a key year for the centralized release of production capacity. A number of new large-scale plants were put into operation, completely subverting the supply and demand pattern of the whole country and even South China: Ruyuan East Sunshine 50,000 tons/year plant was put into operation, Jiangxi Liwen added 40,000 tons of production capacity, and Guangxi Tiandong Jinyi 100,000 tons/year new plant was launched, completely ending the history of no local production enterprises in South China. The regional supply changed from "short supply" to "serious supply is greater than demand", regional competition is hot, and the price is fully opened.
What's more serious is that after 2015, the new production capacity of the industry is still crazy up the ante, and the national plan to add methane chloride production capacity exceeds 1 million tons. Among them, Jiujiang Jiuhong 400,000 tons, Jinling Huaian 300,000 tons, Leshan Fupeng 200,000 tons, Jiangxi Zhengyuan 100,000 tons and other large-scale projects, more than half of the new production capacity is concentrated in East China, further exacerbating the national and regional overcapacity. Since then, the more serious thing about the dichloromethane industry is that after 2015, the new production capacity of the industry is still crazy up the ante, and the national plan to add methane chloride production capacity exceeds 1 million tons. Including Jiujiang Jiuhong 400,000 tons, Jinling Huaian 300,000 tons, Leshan Fupeng 200,000 tons, Jiangxi Zhengyuan 100,000 tons and other large-scale projects, more than half of the new production capacity is concentrated in East China, further exacerbating the national and regional overcapacity. Since then, the permanent overcapacity pattern of the dichloromethane industry has been completely finalized. The permanent overcapacity pattern has been completely finalized. The industry has completely bid farewell to the era of high profits and entered a long-term thin profit, involution, and shuffle cycle., The industry has completely bid farewell to the era of high profits and entered a long-term thin profit, involution, and shuffle cycle.
2. Domestic demand ceiling lock: downstream demand is weak, industry endogenous growth is weak 2. Domestic demand ceiling lock: downstream demand is weak, industry endogenous growth is weak
If the disorderly expansion of production capacity is the "internal cause" of the industry crisis, then the continued weakness of domestic demand and the peak of growth are the "external causes" of the industry crisis. In 2015, the global economic downturn, the profitability of the domestic real economy fell sharply, superimposed the new environmental protection law was officially implemented, and the traditional downstream industries such as domestic coatings, cleaning, polyurethane, refrigeration, and pharmaceutical intermediates were fully restricted. If the disorderly expansion of production capacity is the "internal cause" of the industry crisis, then the continued weakness of domestic demand and the peak of growth are the "external causes" of the industry crisis. In 2015, the global economic downturn, the profitability of the domestic real economy fell sharply, superimposed the new environmental protection law was officially implemented, and the traditional downstream industries such as domestic coatings, cleaning, polyurethane, refrigeration, and pharmaceutical intermediates were fully restricted.
In that year, the overall downstream demand for dichloromethane fell by nearly 1/3 year-on-year. The end point was underutilized, the goods were cautiously obtained, and the rigid demand shrank, and the market transaction continued to be sluggish. Among them, the South China region with the highest degree of marketization and the strictest control experienced the most obvious decline. In late October, the gross profit of most production enterprises in the region directly broke through the cost line and entered a loss-making operation state. The overall downstream demand for dichloromethane fell by nearly 1/3 year-on-year. The end point was underutilized, the goods were cautiously obtained, and the rigid demand shrank. The market transaction continued to be sluggish. Among them, the South China region with the highest degree of marketization and the strictest control experienced the most obvious decline. In
From the perspective of long-term demand structure, the downstream of dichloromethane is dominated by traditional manufacturing industries, and the proportion of high-end high-value-added application scenarios is extremely low. The continuous tightening of domestic environmental protection policies, the gradual relocation of low-end manufacturing industries, the upgrading of VOCs control, and the implementation of toxic pollutant restriction policies have completely peaked the increase in traditional domestic demand. From the perspective of long-term demand structure, the downstream of dichloromethane is dominated by traditional manufacturing industries, and the proportion of high-end high-value-added application scenarios is extremely low. The continuous tightening of domestic environmental protection policies, the gradual relocation of low-end manufacturing industries, the upgrading of VOCs control, and the implementation of toxic pollutant restriction policies have completely peaked the increase in traditional domestic demand, The domestic market has been unable to digest the continued growth of production capacity The domestic market has been unable to digest the continued growth of production capacity , the industry must rely on exports to de-inventory and relieve excess pressure., the industry must rely on exports to de-inventory and relieve excess pressure.
3. Exports become the only life-saving straw: the industry behind the ultra-high export growth rate is helpless 3. Exports become the only life-saving straw: the industry behind the ultra-high export growth rate is helpless
Under the double squeeze of shrinking domestic demand and soaring production capacity, exports have become the only flood discharge channel for domestic dichloromethane enterprises. The industry has officially entered under the double squeeze of shrinking domestic demand and soaring production capacity. Exports have become the only flood discharge channel for domestic dichloromethane enterprises. The industry has officially entered the export highly dependent development model export highly dependent development model . In 2015, the domestic export data showed explosive growth. As of November, the domestic export volume of dichloromethane reached 116,000 tons, an increase of 301% year-on-year, a nearly threefold increase... In 2015, the domestic export data showed explosive growth. As of November, the domestic export volume of dichloromethane reached 116,000 tons, an increase of 301% year-on-year, a nearly threefold increase.
But behind the ultra-high growth rate is the extremely passive survival status quo of the industry: while the export volume skyrocketed, the average export price fell by 15% year-on-year, and the industry is completely dependent on but behind the ultra-high growth rate is the extremely passive survival status quo of the industry: while the export volume skyrocketed, the average export price fell by 15% year-on-year. The industry relies entirely on low-price dumping, low-price dumping of compressed profits, and low-price dumping of compressed profits in exchange for overseas market share, without pricing power and bargaining power.
From the perspective of export structure, domestic DCM exports have a fatal shortcoming - the market is highly concentrated, the structure is single, and the anti-risk ability is extremely poor. In 2015, domestic exports of dichloromethane, from the perspective of export structure, domestic DCM exports have a fatal shortcoming - the market is highly concentrated, the structure is single, and the anti-risk ability is extremely poor. In 2015, 62.7% of domestic exports of dichloromethane went to India, 11.9% to South Korea, 62.7% to India, and 11.9% to South Korea
. The two countries account for more than 70% of the national export share.Among them, India has become the absolute core market. Its local production capacity is only about 400,000 tons. The rigid demand of the downstream pharmaceutical intermediate industry is stable, and the production capacity cannot be self-sufficient. It has long been dependent on imports from China and Russia, which is the largest export depression for domestic enterprises. It is this high dependence on the single market that makes the domestic industry directly exposed to the muzzle of international trade friction and lays a hidden danger for subsequent anti-dumping sanctions. Among them, India has become the absolute core market. Its local production capacity is only about 400,000 tons. The rigid demand of the downstream pharmaceutical intermediate industry is stable, and the production capacity cannot be self-sufficient. It has long been dependent on imports from China and Russia, which is the largest export depression for domestic enterprises. It is this high dependence on the single market that makes the domestic industry directly exposed to the muzzle of international trade friction, laying hidden dangers for subsequent anti-dumping sanctions.
4. Trade backlash: India's anti-dumping sanctions, the industry is completely "exposed" 4. Trade backlash: India's anti-dumping sanctions, the industry is completely "exposed"
Overcapacity → insufficient domestic demand → low-price exports → impact on overseas local industries → trade countermeasures are the most typical trade conflict logic for basic chemicals. The dichloromethane industry went through the whole process in 2015. Overcapacity → insufficient domestic demand → low-price exports → impact on overseas local industries → trade countermeasures are the most typical trade conflict logic for basic chemicals. The dichloromethane industry went through the whole process in 2015.
A large number of low-priced Chinese sources of goods flooded into the Indian market, seriously impacting its local production enterprises and industrial system, and rapidly escalating trade frictions. On April 7, 2015, the Indian Ministry of Commerce and Industry officially initiated a large number of low-priced Chinese sources of dichloromethane originating in China and Russia to flood into the Indian market, seriously impacting its local production enterprises and industrial system, and rapidly escalating trade frictions. On April 7, 2015, the Indian Ministry of Commerce and Industry officially launched a anti-dumping investigation anti-dumping investigation against dichloromethane originating in China and Russia, and started the trade sanctions process. On October 30 of the same year, the final ruling was implemented, and the Chinese import of dichloromethane was imposed, and the trade sanctions process was started. On October 30 of the same year, the final ruling came into effect, and a high anti-dumping duty of 163.7 - 232.47 US dollars/ton was imposed on China's imports of dichloromethane.
The sanctions dealt a fatal blow to the domestic industry: high tariffs directly wiped out the low-price advantage of domestic products, export costs soared sharply, and the core export market was instantly closed. The huge amount of excess capacity that originally relied on export digestion could not be exported, and all returned to the domestic market, making the domestic market, which was already oversupplied and low prices, even worse. The sanctions dealt a fatal blow to the domestic industry: high tariffs directly wiped out the low-price advantage of domestic products, export costs soared, and the core export market was instantly closed. The huge amount of excess capacity that originally relied on export digestion could not be exported, and all returned to the domestic market, making the domestic market, which was already oversupplied and low prices, even worse.
The so-called "market resilience" of dichloromethane is completely supported by exports. Once exports are blocked, all the false prosperity of the industry will completely fade away. The so-called "market resilience" of dichloromethane is completely supported by exports. Once exports are blocked, all the false prosperity of the industry will completely fade away. The real industry face of overcapacity, low price internal roll-in, profit loss, inventory overcapacity, low price internal roll-in, profit loss, and inventory backlog is completely exposed, which is also the core logic of the industry's "export is blocked, and the true form is exposed".
5. Industry cycle review: the inevitability of the deep shuffle tide in 2016 5. Industry cycle review: the inevitability of the deep shuffle tide in 2016
Based on the triple crisis of production capacity, demand, and trade in 2015, the industry ushered in a new round of deep reshuffle in 2016, and belongs to the triple crisis of production capacity, demand, and trade in 2015. The industry ushered in a new round of deep reshuffle in 2016, and belongs to the inevitability of industry clearing.
First, new production capacity continues to be released, and the industry's excess pressure is further increased; second, India's anti-dumping duty has been in effect for a long time, and the export channel is locked, and there is no alternative market to undertake excess supply; third, the domestic end point demand cannot be recovered in the short term, and the rigid demand continues to be weak. Under the superposition of multiple bad bears, the overall operating rate of the industry continues to decline, and small and medium-sized enterprises stop production at a loss and withdraw from the market. The top enterprises barely maintain their cost, equipment and capital advantages, and the industry concentration is passively improved. First, the new production capacity continues to be released, and the industry's excess pressure is further increased. Second, India's anti-dumping duty has been in effect for a long time, and the export channel is locked, and there is no alternative market to undertake excess supply. Third, the Under the superposition of multiple bearish conditions, the overall operating rate of the industry continued to decline, and small and medium-sized enterprises stopped production at a loss and withdrew from the market. The leading enterprises barely maintained their cost, equipment and capital advantages, and the industry concentration was passively increased.
This reshuffle has completely ended the era of domestic dichloromethane barbaric growth, allowing the industry to officially enter the era of domestic dichloromethane barbaric growth from the "era of scale expansion". This reshuffle has completely ended the era of domestic dichloromethane barbaric growth, allowing the industry to officially enter the stock competition, structural optimization, technological upgrading stock competition, structural optimization, and technological upgrading new stage.
VI. Summary of long-term industrial pain points and the path to future breakthroughs VI. Summary of long-term industrial pain points and the path to future breakthroughs
Reviewing the trend of the industry for many years, the dilemma of the dichloromethane industry is not short-term market fluctuations, but the trend of the industry for many years. The dilemma of the dichloromethane industry is not short-term market fluctuations, but structural, institutional, and international long-term industrial pain points. Structural, institutional, and international long-term industrial pain points : disorderly expansion of production capacity, permanent imbalance between supply and demand; peak of traditional domestic demand on the demand side, insufficient high-end application; single export structure on the trade side, no pricing power, and highly susceptible to anti-dumping sanctions; serious homogeneity of products on the industrial side, extremely low added value, and long-term dependence on low-price involution competition.: disorderly expansion of production capacity, permanent imbalance between supply and demand; peak of traditional domestic demand on the demand side, insufficient high-end application; single export structure No pricing power, highly susceptible to anti-dumping sanctions; serious homogeneity of industrial products, extremely low added value, long-term reliance on low-priced internal volume competition.
| (Note: Parts of the document may be AI-generated) | (Note: Parts of the document may be AI-generated)
