Recently, based on industry operation data and market dynamics analysis, China’s methane chlorides industry is expected to reach a peak in capacity expansion in 2026, with continuous production growth; however, issues such as declining capacity utilization and unfavorable supply-demand structure are becoming prominent. The industry faces multiple challenges and is expected to gradually enter a period of capacity contraction and adjustment in the long term.

In terms of output, China’s methane chlorides production in 2025 saw significant growth compared with 2024, primarily driven by the release of new capacities, long-term subsidies on raw material liquid chlorine prices, and increased consumption of raw materials by integrated plants, which boosted enterprise production enthusiasm. In 2026, the industry will enter its highest peak of capacity expansion in the next five years, with monthly production expected to exceed that of 2025, and total annual output likewise projected to increase. However, due to limited profit margins, most newly added units will be put into operation after the first quarter, and overall production growth will be limited due to demand constraints. From 2027 onwards, as industry economics decline and construction cycles take effect, new capacities are expected to gradually decrease, with fewer new projects anticipated.

On the capacity utilization front, the industry in 2025 displayed a 'high in the first half, low in the second half' trend. In the first half of the year, capacity utilization remained high due to the expansion of chlor-alkali units and liquid chlorine price subsidies. In the second half, a sharp rise in liquid chlorine prices caused losses for enterprises, combined with frequent equipment failures, causing capacity utilization to drop to the lowest point of the year. However, thanks to the elimination of ineffective capacities earlier, annual utilization still showed significant improvement over 2024, with monthly output reaching annual peaks, only showing notable declines in months with maintenance. Looking into 2026, capacity utilization is expected to decrease, generally following the 'high in the first half, low in the second half' trend alongside production and downstream consumption. As supply-demand contradictions intensify, utilization may further decline.

The supply-demand structure remains the core challenge for the industry in 2026. In 2025, industry capacity growth accelerated, but demand-side expansion lagged behind, characterized by severe monthly fluctuations and worsening quarterly surpluses. Dichloromethane saw significant temporary consumption increases driven by peak season refrigerant stocking and export orders, whereas chloroform only received support from the production ramp-up of certain downstream industries. Overall, demand growth lagged far behind supply elasticity, and downstream actual consumption fell short of expectations.

In 2026, the fluctuations in the market price of methane chlorides will mainly be driven by three factors: supply and demand, inventory levels, and cost pressures, with the influence of costs expected to gradually increase. Looking at the market trend for the whole year, at the beginning of the year, due to pre-Spring Festival inventory destocking demand and the existing high industry inventory, market prices are likely to hover around the cost line. By mid-year, downstream demand gradually recovers, and the price of raw material liquid chlorine is expected to move out of the negative range into positive fluctuations, increasing companies' cost pressure, which will be further passed on to market prices. In the second half of the year, with the peak season for industry demand and increased subsidies for raw material liquid chlorine, the restrictive effect of costs on prices will gradually weaken, coupled with stable support from export markets, market trends are expected to improve temporarily. By the end of the year, with the concentrated release of new production capacity and fewer planned winter shutdowns, the industry's supply-demand tension will become more pronounced. Even if export volume rises slightly, market prices will likely show a downward trend.

Overall, in 2026, China’s methane chlorides industry will experience an adjustment period of 'production growth and profit pressure,' with the supply-demand imbalance difficult to improve in the short term. Industry insiders suggest that companies need to strengthen refined production and marketing management and raw material inventory control, while leveraging technological innovation to expand downstream demand, in order to cope with structural industry fluctuations and lay a foundation for long-term sustainable development.