Price trend

According to the business data analysis system of SunSirs: Recently, the price of formic acid has risen slightly. As of January 26th, the benchmark price of 85% industrial-grade formic acid in China, according to SunSirs, was 2,350 RMB/ton, an increase of 2.17% compared to the same period last week (January 19th), a month-on-month increase of 2.17%, and a year-on-year decrease of 20.34%.

Supply side: Continued production cuts to maintain prices, coupled with rising expectations of maintenance shutdowns, supported upward price movements

The contraction signals from the supply side were the core driving force behind the market recovery. From an industry-wide perspective, mainstream companies generally maintained reduced operating loads in late January, a continuation of the production reduction and price stabilization agreement reached earlier in the month by three key companies in Liaocheng, Feicheng, and Jingzhou, Hubei. Although the industry inventory levels remained in the medium-to-high range, controllable inventory levels combined with continued reduced operating loads had effectively alleviated the pressure of oversupply, laying the foundation for price stabilization.

More importantly, the maintenance plan for a major 200,000-ton/year plant in Liaocheng, Shandong province, became a significant catalyst for the market upturn. Since this information was disclosed on the 21st, it has continuously influenced market expectations, leading traders and downstream companies to form a consensus on the tightening of future supply.

Demand side: Primarily driven by essential purchases, making it difficult to generate strong momentum

Overall demand remained weak and failed to provide any substantial impetus to the market. In late January, downstream industries generally maintained a just-in-time purchasing approach. Traditional demand sectors such as feed, leather, and printing and dyeing were still in their seasonal off-season, with operating rates below 60%, and there was little enthusiasm for stockpiling. Specifically, the agricultural chemicals industry had not yet fully started its spring planting preparations, and the leather and printing and dyeing industries had limited capacity to absorb products due to weak end-consumer demand. Only the pharmaceutical and chemical sectors maintained a small amount of essential purchasing, which was insufficient to alter the overall supply-demand balance in the market.

Market outlook

According to SunSirs' formic acid data analyst, considering the current market supply and demand dynamics, inventory levels, and industry expectations, the domestic formic acid market is expected to maintain a sideways trend in the short term. The implementation of the planned maintenance at the main plant in Liaocheng, Shandong, will be the key variable determining the market's future direction. If the maintenance is successfully carried out, market supply will tighten significantly. Coupled with the current industry-wide production cuts aimed at maintaining prices, formic acid prices are likely to have further upward potential. Conversely, if the maintenance plan is delayed or canceled, expectations of ample supply may resurface, significantly weakening the upward momentum of prices.

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