Formic Acid Moving Averages Set to Cross Upward—Rising Trend May Be About to Begin

May 18th, news:

According to the commodity market analysis system: Recently, the Chinese formic acid market has shown a sideways consolidation trend, with prices remaining stable and no significant fluctuations. The market supply and demand are in a weak balance. As of May 18, the benchmark price for 85% industrial-grade formic acid in China is 2,400 CNY per ton, down 14.29% month-over-month and 4% year-over-year.

Supply and Demand Landscape: A weak balance prevails, with inventory at a moderately high level.

The current Chinese formic acid market supply and demand relationship is in a weak equilibrium, which is the core reason for the stable prices. On the supply side, the overall supply of goods in the market is sufficient, and there has been no significant reduction in production capacity. Most production enterprises are operating smoothly, providing a basic support for price stability but not creating momentum for price increases. However, it is worth noting that the overall industry inventory is at a relatively high level. Starting from May 13th, the market began to expect an accumulation of inventory, further suppressing the room for price increases.

On the demand side, there is currently a critical shortfall in the market. Downstream manufacturers generally adopt a bearish outlook, with weak purchasing intentions—most are only making essential purchases and replenishing inventories in small quantities, without engaging in any large-scale stockpiling activities. As a result, market transaction activity remains sluggish. Formic acid has a wide range of downstream applications, covering sectors such as rubber, pharmaceuticals, textile dyeing and printing, leather, and agrochemicals. However, recently, the operating rates in most downstream industries have remained at low levels, and the weak demand trend is evident. This lack of effective demand stimulation has left the market in a state of weak equilibrium, making it difficult to drive prices upward.

Price Forecast: Expectations of maintenance exist, which could break the sideways pattern.

During the sideways trading period from May 11 to 15, key market variables emerged, with the most noteworthy being the expectation of plant maintenance on the supply side in China, which could become the critical factor to break the current sideways pattern.

On May 13, market sources indicated that several formic acid manufacturers plan to carry out plant maintenance operations around mid-month. Subsequently, on May 14 and 15, industry insiders provided further clarification: this week-end and at the end of the current week, some companies will officially launch their maintenance schedules. According to past market patterns, company plant maintenance will directly lead to a reduction in market supply, alleviating the current pressure from accumulating inventories and thereby providing support for prices—and may even spur a slight increase in prices.

Looking at the spot market, the 10-day moving average is currently below the 20-day moving average, with the negative divergence narrowing and the gap between the two averages shrinking. This indicates that the downward trend is slowing and a bullish crossover signal is imminent, signaling the start of an upward move. Moreover, the current price of formic acid is at a low level, leaving room for further price increases.

Overall, the current Chinese formic acid market is in a weak but stable phase. Maintenance expectations are the main short-term supportive factor, and it is anticipated that prices will show a slight upward trend in the short term. However, long-term trends will still depend on substantial improvements in the supply and demand situation.