Recently, domestic formic acid prices have surged. As of November 9th, the benchmark price of 85% industrial grade formic acid was 2600 yuan/ton, an increase of 4% from the beginning of the month.
Supply: The realization of the production reduction effect is the dominant variable in this week’s pricing
The direct driving force behind the price increase is on the supply side. The previous production reduction effect continues to be released, with a general decline in enterprise inventory and a tight circulation of social spot goods; Mainstream factories have basically achieved production and sales balance, and their willingness to raise prices has increased. The supply has not turned loose, but has switched from “rapid tightening” to “low-level stability”, providing bottom support for prices.
Requirement: Urgent need to support bottom line transactions, insufficient willingness to chase high prices
The demand side is the main constraint that prevents prices from continuing to rise. The price increase has been transmitted downstream, and with the rise in procurement costs, downstream consumers generally switch to purchasing for immediate needs and replenishing as needed, lacking the ability to stock up on inventory. The manufacturer’s shipments are smooth and the fundamentals have not weakened, but the trading volume is limited to “sufficient” and cannot provide pulling force for the second round of upward trend. The market has entered a stalemate game: the supply side is unwilling to lower prices, and the demand side is unwilling to chase higher prices, with prices repeatedly confirmed around 2600 yuan/ton.
Market forecast: There is still upward momentum
The supply contraction caused by the production reduction has been realized, and the short-term downside risk is limited. However, demand is only following up with essential needs, rather than demand expansion. Therefore, prices are expected to rise steadily, but specific changes in market supply and demand still need to be monitored.
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