Supply and Demand Boost Formic Acid Prices Gradually in China

March 23rd, news:

According to the commodity market analysis system: The Chinese formic acid market has shown a gradual upward trend recently. As of March 23, the price of 85% industrial-grade formic acid was 3,000 CNY per ton, up 9% from the same period last week (March 16), up 23% month-over-month, and down 9.77% year-over-year.

Supply continues to contract

Starting March 19, temporary production shutdowns at certain manufacturing facilities have led to a sustained contraction in the market’s effective supply. Coupled with the already existing trend of declining supply volumes, expectations of tight supply have been steadily intensifying. Moreover, market reports indicate that major producers in Shandong Province plan to carry out maintenance on their 350,000-ton formic acid plants in March. This expectation has further reinforced the outlook for a contraction in supply. According to data released on March 23, China’s formic acid market operating rates have declined, resulting in a continued reduction in supply volumes and a persistent downward trend in inventories. As a result, the market has officially entered a state of tight supply-demand balance, providing strong support for a significant price increase. Meanwhile, the international market environment is also exerting an indirect impact on China’s supply side: the conflict in the Middle East has driven up energy and raw material costs, prompting European chemical companies such as BASF to raise their formic acid prices. This development has further shifted the global formic acid market’s pricing center upward, providing external support for Chinese manufacturers to adjust their own prices.

Demand in China is performing well.

Since mid-to-late March, the formaldehyde market has consistently maintained strong sales performance. Downstream buyers have been steadily replenishing their inventories according to demand, providing robust support for essential needs. Product distribution channels have remained smooth, effectively accelerating the depletion of inventories at producing enterprises and giving manufacturers the confidence to raise prices. From an international perspective, formaldehyde prices overseas surged significantly in mid-to-late March. Driven by this trend, China’s export demand for formaldehyde is expected to increase markedly—especially in emerging Southeast Asian markets such as Vietnam, which are highly dependent on Chinese formaldehyde. The growing export demand has further widened the supply-demand gap in the Chinese market. With both domestic and international factors working in tandem, Chinese manufacturers have continued to raise their ex-factory prices for formaldehyde.

Formic acid data analysts believe that in mid-to-late March, the formic acid market prices in China shifted from stable consolidation to a sustained upward trend. The core logic is the resonance between the continuous contraction of the supply side and the steady improvement of the demand side, coupled with the support of rising international market prices and the expectation of manufacturers' maintenance. This has pushed the market supply-demand pattern from a dynamic balance to a tight balance, successfully breaking through the 3,000 CNY/ton threshold. Looking ahead, as some manufacturers' maintenance plans at the end of the month are implemented, the market supply will further contract. Coupled with the continuous transmission of overseas market benefits and the release of China's export demand, there is still room for formic acid prices to rise. At the same time, it is necessary to pay close attention to the impact of geopolitical changes on energy and raw material costs, changes in downstream demand, and the implementation of maintenance plans.