June 22nd, according to news,
According to the commodity market analysis system: Recently, the overall 85% industrial grade formic acid market in China has maintained a weak operating pattern with fluctuating downward trends. As of June 22, the benchmark price for 85% industrial grade formic acid was 2,080 CNY/ton, a decrease of 5.45% from last week.
Market Fundamentals: Both Supply and Demand Sides Are Weak, No Positive Support
Demand Side: During the traditional low consumption season, essential demand is weak.
Currently, the downstream formic acid market in China has entered the traditional off-season. The operating rates of major application industries such as leather, pharmaceuticals, pesticides, and rubber are generally low. Downstream factories have high finished product inventories, and their purchasing model is mainly small-scale, just-in-time replenishment, with very little intention to stock up in large quantities. Even though the upstream sales situation has shown a slight month-on-month improvement after the price drop, it is merely sporadic replenishment stimulated by lower prices, not a genuine recovery in end-user demand. This cannot fundamentally improve the weak market situation, and the weakness in demand continues to suppress the upward potential of formic acid prices.
Supply Side: High Inventory Levels and Delayed Maintenance Keep Market Supply Pressure Persistently High
On one hand, the overall inventory of China's formic acid industry is currently at a moderately high level. With the continuous accumulation of supplies under normal operation of previous facilities, the speed of inventory depletion by manufacturers is slow, and there is an ample supply of spot goods, leaving no support for higher prices from the upstream. On the other hand, the plant maintenance and resumption plans that the industry had anticipated are likely to be delayed, leading to the failure of the expected reduction in market supplies, and further increasing the pressure on the supply of spot goods within the market.
Market Forecast: There is still room for downward movement in formic acid prices in China.
SpotCom shows that formic acid is exhibiting a negative divergence trend (i.e., the short-term moving average is below the long-term moving average, and the difference is widening). Considering the current supply and demand fundamentals and the operational status of the industry, the short-term Chinese formic acid market is still unlikely to escape the weak trend. The current sideways consolidation is just a temporary pause, and there is still an expectation for further price declines in the future. Specific attention should be paid to the concentrated restocking situation of downstream players and the actual maintenance progress of formic acid facilities in China.
