Recently, the formic acid market as a whole has shown a significant decline, with a weak operating trend. The overall market is under significant pressure, with a significant month on month decline. As of August 4th, the benchmark price of 85% industrial grade formic acid in China was 1800 yuan/ton, which showed a significant decline from the previous high point. The overall market atmosphere was quiet, and the transaction activity was insufficient. The industry as a whole was in a weak off-season, and the supply-demand imbalance was the core factor leading the price decline in this round.
The oversupply of loose supply is the core driving force behind the continued weakness of formic acid prices this week. This week, the overall operating rate of domestic formic acid production enterprises remained stable, mainstream factories were running smoothly, the overall supply of goods in the industry was sufficient, and the accumulation of spot inventory in the market was significant. In the early stage, most companies had sufficient inventory, coupled with the continuous release of new sources of goods into the market, leading to a gradual increase in inventory pressure in the industry. In order to quickly digest inventory and recover funds, most production enterprises and traders actively lowered their ex factory quotations, resulting in a widespread phenomenon of discounted shipments, further lowering the overall market quotation level and driving down spot prices. The supply side of the market is completely in a loose pattern of oversupply.
Downstream demand remains weak, making it difficult to support price stabilization and recovery. At present, it is the off-season for traditional chemical consumption, and the operating rates of downstream industries such as leather, printing and dyeing, pharmaceuticals, and rubber additives in formic acid are generally low. Terminal enterprises lack orders and production enthusiasm. Downstream manufacturers mainly purchase small orders for essential needs, with little willingness to stock up. The overall transaction volume in the market is relatively small, and there is a lack of favorable support for centralized procurement. The sustained sluggishness on the demand side has led to a sluggish market buying atmosphere, exacerbating the problem of supply-demand mismatch, and completely losing the driving force for price increases, which is an important reason for the continued weakness of the market.
The cost and market mentality further exacerbate the weak market situation. The price of methanol, the core raw material for formic acid, has been fluctuating weakly recently, and the support for production costs is insufficient. The pressure on production costs for enterprises has eased, providing space for price reduction and shipment. At the same time, affected by the continuous price reduction trend, the market has a strong bearish sentiment, and traders are generally cautious in trading, lowering prices and shipping according to the market. The wait-and-see mentality of terminal procurement has intensified, forming a weak cycle of “price reduction wait-and-see further price reduction”, and the overall market trading sentiment is sluggish.
Overall, in the past week, the formic acid market has been in a weak adjustment stage due to multiple negative factors such as loose supply, off-season demand, and weak mentality. Prices have continued to decline. In the short term, there is no obvious sign of recovery in terminal demand, and industry inventory pressure still exists. It is expected that the formic acid market will continue to fluctuate weakly in the future, and it is difficult for prices to stabilize and recover. The market may continue to operate at a low level, and specific changes in market supply and demand still need to be monitored.
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