Weak Demand for Formic Acid, Prices Stuck in a Supply-Demand Tug-of-War in China

September 15, News

According to the commodity market analysis system: Recently, the formic acid market has shown a fluctuating and weakening trend. As of September 15th, the benchmark price for 85% industrial-grade formic acid in China was 3,100 CNY per ton, a decrease of 3.73% from last week (September 8th), a month-on-month decrease of 6.63%, and a year-on-year increase of 15.89%.

The formic acid market in China has experienced a shift from expected support to actual weakness.

September 8-10, the market focused on the supply reduction expectations brought by the maintenance plan of the Liaocheng factory. Although the low operating rates of downstream industries in China constrained domestic demand, the robust performance of exports provided some support. Under the tug-of-war between supply and demand, prices reached a temporary balance. During this period, market sentiment was cautiously optimistic, with many traders adopting a wait-and-see attitude, awaiting the implementation of the maintenance.

On September 11, the price of formic acid decreased by 120 CNY per ton. The operating rates in the main application fields such as agriculture, leather, and chemicals continued to run at low levels, with weak demand from end-users. Secondly, the maintenance plan for the factory in Liaocheng was not carried out as scheduled, leading to the market's expectation of a supply reduction failing to materialize. This resulted in a loss of confidence among traders, who generally adopted a wait-and-see attitude, causing the market trading atmosphere to become cold.

Among the key downstream industries for formic acid, the agricultural sector is currently undergoing a seasonal adjustment period, with weak growth in demand for feed additives. Meanwhile, the leather and textile industries are struggling due to sluggish end-consumer demand, keeping their operating rates below 60%. Although the chemical and pharmaceutical sectors continue to exhibit robust, albeit rigid, demand, purchasing activities have slowed down, resulting in an overall "just-in-time procurement" approach. This cumulative effect of weak demand across multiple sectors has significantly reduced China's market absorption capacity.

A formic acid data analyst notes: From the initial optimism about the "Golden September and Silver October" peak season in early September, to mid-month concerns over weak demand, traders' sentiment has shifted rapidly. As a result, the formic acid market is currently experiencing a volatile yet subdued trend. In the short term, the market is likely to remain stuck in its current stalemate, underscoring the need to closely monitor advancements in maintenance schedules as well as any shifts in downstream demand that could create opportunities for change.