July 20th News
According to the commodity market analysis system: Recently, the formic acid market in China has experienced a cliff-like decline. As of July 20th, the benchmark price of formic acid was 2,000 CNY per ton, a 13% decrease from 2,300 CNY per ton on July 13th last week.
The overall performance in the earlier period was stable, and prices have remained steady over the long term.
In the early part of mid-July, the Chinese formic acid market operated steadily overall, with prices maintaining a stable trend for a long time, mainly due to the dynamic balance between supply and demand. The previous phase of improved sales in the industry effectively reduced the inventory, bringing the overall inventory levels of enterprises to a moderate and reasonable level. The relief of inventory pressure provided a solid bottom support for formic acid prices. Although the market as a whole was operating smoothly, the industry had officially entered the traditional low-demand season, with downstream terminals lacking concentrated restocking demand. The absence of new positive stimuli and the lack of upward momentum kept the market in a stalemate, limiting both the potential for price increases and decreases.
Demand-side weaknesses continue to stand out, leading to a turning point in the market.
As time progresses, negative market factors gradually accumulate, becoming the key to a turning point in the market. The shortcomings on the demand side continue to stand out, with the off-season effect continuously amplifying. Downstream enterprises' willingness to purchase remains weak, maintaining only a rigid, as-needed procurement model. Overall, the market trading atmosphere is subdued, and the support from demand continues to be insufficient. Weak demand directly leads to a slowdown in companies' shipping pace, poor circulation of goods within the market, and the beginning of a gradual accumulation of inventory in the industry. The balance between supply and demand is slowly being disrupted, and the downward pressure on the market continues to intensify.
Affected by the concentrated intensification of negative factors, China’s formic acid market experienced a sharp decline in late July. In addition to the persistent weak terminal demand and rising inventory pressure that served as the core drag, intensified market competition further amplified the price decrease. Faced with a sluggish market environment and mounting inventories, some formic acid producers adopted a sales strategy of offering discounts and lowering prices in order to clear existing stock and gain market share. This disrupted the previously stable pricing system, driving the mainstream market price to plummet rapidly and ultimately triggering a substantial single-day price drop of nearly 9%. As a result, the market has officially entered a phase of weak performance.
Market Forecast: In the short term, the current market lacks significant positive catalysts, and downstream demand is unlikely to rebound quickly during the off-season. The industry’s inventory depletion cycle is expected to be relatively long, so the Chinese formic acid market will likely continue its weak and consolidating trend, with prices potentially facing some room for minor fluctuations and declines. The subsequent market performance will largely depend on the recovery of downstream demand and the pace of inventory depletion within the industry.
