Formic Acid Market Supply Is Loose, Inventory Reduction Is Orderly

January 19th, News

According to the commodity market analysis system: Recently, the Chinese formic acid market has stabilized. As of January 19, the benchmark price for 85% industrial-grade formic acid is 2300 CNY/ton, unchanged from the beginning of the year, down 18.73% month-over-month, and down 22% year-over-year.

Supply and Demand Landscape: A Dynamic Balance Formed by Loose Supply and Steady Demand

Supply Side: The market has consistently maintained a loose supply situation, with ample market resources and smooth distribution channels. Although the consensus on production cuts to stabilize prices reached by key producers in Liaocheng, Feicheng, and Jingzhou, Hubei, did not change the current loose supply situation, it effectively curbed the risk of price declines and sent a clear signal of price support to the market. This is one of the important supporting factors for the current mainstream price to remain firm.

On the demand side, influenced by the long-term stable operation of prices, downstream enterprises in China have become more rational in their purchasing mentality. Their procurement pace has gradually stabilized, abandoning the previous wait-and-see attitude and shifting to a procurement model based on actual needs. This has effectively absorbed the abundant supply resources in the market.

Inventory Level: Under the dual influence of loose supply and stable demand, manufacturers' inventory levels have shown a moderate downward trend, gradually approaching the median range of the industry. Inventory pressure has been effectively alleviated, forming a virtuous cycle of "loose supply but orderly destocking."

The formic acid data analyst believes that, given the current market dynamics, although the supply side remains relatively loose, there are still measures in place to curb production and stabilize prices, providing a floor for the market. On the demand side, procurement remains steady, and rigid demand continues to be solid. Inventory levels have moderately declined and are now within a reasonable range. Under the combined influence of these multiple factors, China’s formic acid market is highly likely to continue its current sideways consolidation trend in the short term. The mainstream transaction price is expected to remain stable around the central point of 2,300 CNY per ton; however, specific developments will still depend on changes in market supply and demand.