Dimethyl Sulphate Prices Rise in the US Due to Supply Constraints, and Limited Trade

Texas, (US):  During the first half of September 2024, Dimethyl Sulphate (DMS) prices have witnessed a persistent uptrend across the North American and Asian markets. The double whammy of supply shortages coupled with high upstream costs has continuously encouraged sellers to test DMS markets with a series of price hikes. Demand for DMS from the downstream derivative industry has been stagnant during this time frame. In the near term, players across the region are questioning the sustainability of these price increases in September and October, amidst opposing factors: persistent supply issues and shipping disruptions on one side, and stable to low demand on the other.

Prices of DMS have been firm in the US market since August 2024, supported by tight supplies stemming from cracker outages and reduced run rates at several facilities. Demand for DMS from the downstream agrochemical, surfactant, and water treatment sectors has been moderate in the domestic market. On the production side, feedstock prices for methanol and sulfuric acid have increased, leading to higher production costs for DMS. However, upstream crude oil futures displayed significant volatility over the week, influenced by escalating tensions in the Middle East on one hand and oil demand concerns due to disappointing economic data from China and the US on the other.

Additionally, the supply of DMS has remained tight due to low operating rates and reduced imports from the Asian market, particularly China and South Korea. The average cost to ship a 40-foot container from South Korea to the U.S. East Coast increased by 11.9% month-over-month to 8.66 million won (approximately USD 6,530), according to data from the Korea Customs Service, further supporting elevated prices in the US domestic market. Consequently, prices of DMS delivered to Los Angeles were settled at USD 1730/MT, reflecting a monthly increase of USD 40/MT during August 2024.

Moreover, some ports in North America remain congested due to order surges and container shortages. The master contract between the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) is set to expire on September 30, 2024. This contract covers the US East Coast and Gulf ports. If a new master agreement is not reached, the ILA is preparing to strike on October 1, 2024, which could disrupt U.S. supply chains and result in delays that may take weeks or months to resolve.

Similarly, in India, DMS prices have strengthened due to a combination of tight supply and stable demand fundamentals. The imports from China and other exporting source have decreased due to low production amid tight supply of feedstock Methanol and Sulphuric acid and severe port congestion. Weather conditions at Kandla Port have caused significant delays and hindered cargo operations, exerting pressure on container flows from India’s west coast ports. Torrential rain and flooding at Mundra Port have further exacerbated vessel delays and capacity constraints, impacting the supply of DMS in the Indian domestic market. Therefore, prices of DMS CFR Hazira were settled at USD 496/MT during the same time frame.

Market reports have highlighted a significant reduction in ocean freight rates from Ningbo port in China to other Asian ports. Accordingly, shipping costs have decreased by 10% to Ho Chi Minh, Vietnam; 13% to Malaysia; 15% to Jakarta, Indonesia; and 40% to India in the past few months, as of mid-August. India has seen a particularly large decrease, with recent rates reported at around $2,000 per 40-foot container, down from a peak of $4,320 in June.

Looking ahead, ChemAnalyst expects DMS prices to increase in anticipation of rising feedstock prices for methanol and sulfuric acid. Furthermore, the supply of DMS is expected to remain tight due to low regional operating rates and reduced supplies from exporting sources, which may put additional pressure on DMS prices. Additionally, demand for DMS is likely to remain steady in the regional market. However, in the long term, several market players anticipate a recovery in downstream demand, which may further boost market sentiment for DMS.