Formic Acid Shows a Stalemate Trend of "Stable Prices and Flat Volumes"

May 11th News

According to the commodity market analysis system: The Chinese formic acid market as a whole shows a continuous sideways consolidation trend, with prices remaining stable and no significant fluctuations. The market supply and demand are in a weak balance. As of May 11, the benchmark price for 85% industrial-grade formic acid in China is 2,400 CNY/ton, down 20% month-over-month and down 14.29% year-over-year.

In this phase, the price of formic acid has remained stable, but the supply-demand contradiction within the market has gradually become apparent. The main influencing factors are concentrated in three aspects: supply, inventory, and downstream demand.

On the supply side, the overall situation remains stable, with no significant reduction in production capacity. The market is well-supplied with goods, providing a fundamental support for price stability. There has been no upward pressure on prices due to supply shortages.

At the inventory level, influenced by the concentrated shipment of low-priced orders ahead of the May Day holiday, some manufacturers saw their inventories decline somewhat during the holiday period, which to some extent eased inventory pressure. However, from an industry-wide perspective, inventories remain in the upper-middle range and have not yet reached a state of severe shortage, thus providing limited support for prices.

Demand is the core weakness of the current market, with downstream manufacturers generally holding a pessimistic attitude. The willingness to purchase is low, mainly characterized by buying based on immediate needs and small-scale inventory replenishment, without any concentrated stockpiling activities. This has led to insufficient trading activity in the market. Additionally, there is a lack of favorable support for the market in the subsequent period, making it difficult to generate effective demand. As a result, the overall market is in a state of weak equilibrium, unable to drive prices upward.

Outlook: Short-term stability is hard to change, and downside risks still exist.

Combining the information from Spotcom, the short-term moving average of formic acid is still below the long-term moving average, indicating that there is a probability that the price of formic acid will gradually decline while remaining stable, with the difference between the averages narrowing and the downward trend slowing. Specific attention still needs to be paid to changes in market supply and demand in China.