Supply-Demand Dynamics Dominate Market Landscape; Formic Acid Prices Remain Stable with a Slight Increase

February 9th News

According to the commodity market analysis system: Recently, formic acid in China has shown a steady upward trend. As of February 9, the benchmark price for 85% formic acid in China was 2,440 CNY per ton, up 3.83% from 2,350 CNY per ton in the same period last week (February 2), up 6.09% month-over-month, and down 17.29% year-over-year.

Supply Side: Maintenance and Capacity Load Dominate, Inventory Provides Support

Supply is one of the core driving factors behind the fluctuations in the formic acid market this period. On one hand, plant maintenance has led to a temporary reduction in supply. A 100,000-ton capacity facility in Liaocheng was under maintenance in the early part of the month, directly impacting regional supply. On the other hand, most manufacturers' facilities are not operating at full capacity, and some have reduced production temporarily, leading to a continued tight supply situation in the market, providing a fundamental support for price increases. Additionally, the impact of inventory is particularly crucial. At the end of January, manufacturers offered discounts to secure a large number of orders, keeping the market inventory at a moderately low level in the early part of the month, further highlighting the tight supply situation and becoming a significant driver of price increases. The reasonable buffer of industry inventory in the earlier period also prevented the supply gap caused by maintenance from leading to significant price fluctuations.

Demand Side: China’s rigid demand is weak, and exports piling up at ports are providing a supplementary boost.

On the demand side, we’re seeing a divergent pattern characterized by “weak domestic demand in China, supported by robust exports.” In the Chinese market, the approaching Spring Festival holiday is the key influencing factor. Enterprises in downstream sectors such as rubber, pharmaceuticals, leather goods, and agrochemicals are gradually wrapping up their inventory preparations, adopting a more cautious purchasing stance. Most of their procurement is driven by rigid demand, with limited willingness to stockpile, thus exerting only limited upward pressure on formic acid prices. On the export front, the arrival of the pre-holiday port-loading period has emerged as an important bright spot for demand. Export shipments have increased compared to earlier periods, effectively absorbing some of China’s supply and providing certain support to price levels.

Formic acid data analysts believe that, considering the current market landscape and the trends on both the supply and demand sides, it is expected that the Chinese formic acid market will mainly maintain stable prices before the Spring Festival, with a relatively limited price fluctuation. Specific developments still need to be monitored for changes in supply and demand.