Market Game: Formic Acid Prices May Rise

March 9th News

According to the commodity market analysis system: Recently, the price of formic acid has risen. As of March 9th, the benchmark price for 85% industrial-grade formic acid is 2,500 CNY per ton, up 2.04% from the same period last week (March 2nd), up 2.46% month-over-month, and down 18% year-over-year.

(1) Supply Side: Maintenance expectations provide support, and short-term supply remains stable for now.

This week, the formic acid market supply showed a characteristic of "expected tightening, but actually stable." In March, Asde and Luxi Chemical in Shandong, the core production area of China, planned maintenance for a total of 350,000 tons of formic acid facilities. This news became the key factor supporting the market. As of March 9th, the maintenance plans have not been widely implemented, and the operating rates of the enterprises remained at normal levels, with sufficient market supply.

At the same time, around March 4, influenced by the expectations of fluctuations in ocean freight costs, Chinese companies concentrated on shipping export orders. The previously moderate to high inventory levels were effectively reduced, alleviating potential pressure on the supply side and laying a foundation for price stability.

(2) Demand Side: Peak Season Expectations Rise, Terminal Sales Show Weakness

On the demand side, there is a divergence between expectations and reality. On the one hand, March and April traditionally mark the recovery period for downstream industries such as pesticides, leather, and dyeing and printing. The start of spring farming preparations and rising temperatures will boost downstream operating rates, fueling strong expectations of a rebound in demand. On the other hand, this week, actual transaction performance in the end-market has been weak. The price hikes initiated by manufacturers earlier have failed to effectively stimulate purchasing, and high-priced goods are facing difficulties in being sold, ultimately leading to the failure of the price adjustment.

(3) Transactions and Inventory: The pace of inventory reduction has slowed, and trading activity is returning to a more rational level.

This week, inventory and transaction pace changed in tandem. Before March 4, concentrated export shipments led to inventory digestion, and the market trading atmosphere slightly warmed up; however, as high-priced goods experienced sluggish sales, companies slowed down their shipment pace, and inventory levels returned to stability, without any significant accumulation or shortage. On March 9, the market trading atmosphere returned to stability, the supply and demand situation balanced out, and prices remained stable.

Market Outlook: With raw material prices soaring significantly, we expect this to be passed on to formic acid prices.

Methanol: Over 60% of China's imports come from Iran, and disruptions to shipping in the Strait of Hormuz have led to delays in the arrival of imported supplies; the intensity of spring inspections in China was less than expected, coupled with the resumption of production in downstream formaldehyde and dimethyl ether, pushing prices up due to a tight supply and demand situation.

Sulfuric acid: The high import dependency on raw material sulfur, with supply disruptions in the Middle East causing a surge in sulfur prices; coupled with maintenance at acid plants and strong demand for fertilizer preparation during spring plowing, the resonance of costs and supply-demand dynamics has driven up the price of sulfuric acid.

Formic acid data analysts believe: The price of formic acid has been stable recently, and a significant increase in raw material costs may lead to an increase in the price of formic acid. The specific situation still needs to be monitored based on changes in market supply and demand.