Price trend
Prices in major production areas were slowly trending downwards. According to the commodity price analysis system of SunSirs, as of January 16th, the average price of formaldehyde in Shandong province was 1,026 RMB/ton, a decrease of 1.08% compared to the beginning of the month.
Analysis of key influencing factors
The core contradiction in the market was that "costs are supported, but demand is lagging," leading to a double squeeze on prices and profits.
1. Ample Supply
Overall industry operating rates were not high, but due to even weaker demand, the market still had an ample supply of spot goods.
2. Weak Demand (Core Drag)
The panel industry is a major drag: The artificial board industry, the largest downstream consumer of formaldehyde, was experiencing continuous demand contraction due to factors such as the real estate market downturn, high raw material costs, and fierce industry competition. They were only maintaining essential purchases of formaldehyde. Other downstream industries primarily used formaldehyde internally: Fine chemical downstream industries such as methylal and hexamine were experiencing poor profitability and mainly consumed their own internally produced formaldehyde, resulting in little external demand.
3. Inefficient cost transmission
The expected decrease in methanol imports, coupled with significant inventory reductions at ports, was driving up methanol prices. As of January 16th, SunSirs' benchmark price for methanol was 2,250.83 RMB/ton, a 1.96% increase compared to the beginning of the month. However, this price increase was difficult to effectively pass on to formaldehyde prices due to weak downstream demand. To control inventory, factories were forced to offer discounts to move their products.
Market outlook
In the short term, the formaldehyde market is expected to maintain a "weak and stable" pattern. Rising costs will support prices and limit downward movement, but weak demand and inventory pressure at factories will suppress any potential for price increases. Whether the market can break this stalemate depends crucially on whether there is an unexpected improvement in the operating rates and inventory levels of the downstream panel industry.
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