DMF: 2022 Market Summary and 2023 Outlook

DMF: 2022 Market Summary and 2023 Outlook

Introduction: In 2022, China's DMF market ushered in a period of capacity expansion, but affected by a number of aspects, downstream demand shrinks, exports also showed a certain proportion of decline, the market supply and demand weak equilibrium situation was broken, competition intensified in the industry, DMF began to return to the value of the road.

Supply and demand imbalance intensified market prices fell sharply

In 2022, the domestic DMF market in the context of capacity growth, weakening demand, showing a significant downward trend. Throughout the year, the market in Jiangsu ran in the range of 5,400-17,200 yuan / ton of acceptances delivered, with an oscillation of up to 11,800 yuan / ton. The lowest point appeared in early December, the highest point appeared in late January. According to statistics, the average price of Jiangsu market from January to December was RMB11,773/ton, down about 9% compared with the average price of RMB12,949/ton in 2021.

In the first quarter, the DMF market price level was generally running high. Before the Spring Festival holiday, in the context of environmental policies affecting the supply contraction, demand to enhance the price trend, East China market prices rose to a maximum of 17,200 yuan / ton acceptance delivered, after the holiday market is mostly shock trend. However, after entering March, the domestic epidemic multi-point proliferation, multi-location control measures to upgrade, the logistics and transport and end consumption caused by the inhibition of domestic DMF part of the main producers inventory level to enhance, reduce prices to increase the intention to ship, DMF market gradually entered the downward channel, until mid-April, the cumulative price decline of more than 2800 yuan / ton, then the factory to reduce the start-up load, the supply side pressure has been reduced, the downstream Phase into the market for replenishment support, the market opened a wave of rebound momentum. However, many places affected by public health events, transportation restrictions, demand has not yet fully recovered, there is still resistance to the downward transmission of costs, the market in May and June generally showed a shaky running trend. Into the third quarter, Anhui Jinhe 30,000 tons / year device and Jiujiang Heart to Heart a 100,000 tons / year device has been put into operation, DMF market ushered in a wave of new production capacity to put into operation, resulting in supply pressure to enhance the pressure on the market, the DMF price gradually fell below the high level of 10,000 yuan. And the slow recovery of terminal demand, DMF market in the fourth quarter, the short atmosphere continues, most of the time the market showed a downward trend, in December, as the epidemic prevention policy gradually into a new phase, the confidence of market practitioners have improved, and near the end of the year, pre-holiday stockpiling overlapping social surface inventory is low, the demand was briefly released, supporting DMF prices rebounded to some extent. As of the end of December, Jiangsu market prices refer to 6000-6100 yuan / ton near the acceptance to deliver, compared with the beginning of the year prices fell about 10400 yuan / ton.

In 2022, the domestic DMF industry is generally profitable, but profitability has declined significantly. January-December average profit of about 6,110 yuan / ton, compared with the average profit of 7,534.77 yuan / ton in 2020, a decline of about 18.9%. 2022 the highest level of profitability at 11,817.25 yuan / ton, appeared in February, the lowest in early December -306 yuan / ton.

In 2022, the profit level of DMF enterprises' production gradually declined. The average profit in the first half of the year was about $9077.59/ton. Among them, the first quarter DMF production profit is higher, with an average profit of up to 10889.575 yuan / ton or more. In the second and third quarters, as DMF prices continue to fall, the level of corporate production profits decreased significantly, and after the fourth quarter, production profits shrank further, after falling to near the cost line, and even occasional losses.

The release of new production capacity, production decline year-on-year

2022 domestic DMF market ushered in a wave of capacity expansion, capacity reached 1.03 million tons, an increase of 14.4%, mainly in the third quarter of this year, Anhui Jinhe 30,000 tons / year device and Jiujiang Heart to Heart a 100,000 tons / year device put into operation. Although the capacity growth, but the new capacity release concentrated in the second half of the year, and the new device start-up adjustment period is long, the start-up load level is low, at the same time, with DMF prices continue to decline, profit levels shrink significantly, the fourth quarter plant devices focus on reducing production, resulting in a significant decline in production. Overall, in 2022, China's DMF industry output is estimated at about 690,000 tons, down about 40,000 tons from the same period last year, with an average monthly output of about 57,000 tons.

Outlook for 2023

Domestic DMF projects currently under construction have been completed as well as under construction with a combined capacity of about 650,000 tons, of which Jiangxi Jiujiang Xinlianxin Co., Ltd. Phase II 100,000-ton plant is scheduled to be put into operation in January 2023; Luci Chemical's newly expanded single set of 200,000-ton DMF plant in the plant, the construction of which has been completed, the specific time of commissioning is not yet determined. Ltd. 150,000 tons of DMF project is planned to be put into operation at the end of the second quarter of 2023, the device is currently under construction. Ltd. 100,000 tons / year plant under construction, is expected to be put into operation in the first quarter of 2023 and the second quarter; Henan Ruibai New Materials Co.

The above DMF expansion capacity are above 100,000 tons level, assuming that all production capacity is completed and put into operation, China's DMF production capacity will reach about 1.68 million tons in 2023, the market supply pressure will be significantly increased. Considering the obvious imbalance between supply and demand in DMF market, and the significant decline in DMF profit in 2022, some DMF plants are likely to be delayed.

DMF is mainly used as PU slurry, used in bags, shoes and other fields. The above terminal industry development is more mature, in 2022 by the global economic recession and the impact of domestic epidemic, the above industry boom is low, so the demand for DMF reduced, the industry development is sluggish. With the gradual recovery of the global economy, DMF market demand will gradually pick up. But next year, DMF production capacity is still a large number of devices put into operation, the domestic DMF overcapacity situation is serious, and consider the end demand is difficult to grow significantly, the future development of DMF industry space is small.