According to the Commodity Market Analysis System of Shengyi Society, the price of formic acid has slightly rebounded recently. As of January 26th, the benchmark price of 85% industrial grade formic acid in Shengyi Society’s domestic market was 2350 yuan/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: Production reduction and price protection continue+maintenance expectations rise, supporting price increases
The contraction signal from the supply side is the core driving force behind the market recovery this time. From the perspective of the industry as a whole, mainstream enterprises generally maintained a reduced workload operation in late January, which continued the spirit of the resolution reached by the three core enterprises in Liaocheng, Feicheng, and Jingzhou, Hubei at the beginning of the month to reduce production and maintain prices. Although the current industry inventory is still in the mid to high range, the controllable inventory level combined with continuous load reduction operation has effectively alleviated the pressure of loose supply in the early stage and laid the foundation for price stabilization.
More importantly, the maintenance plan for a 200000 ton/year main plant in Liaocheng, Shandong has become an important catalyst for market growth. Since its disclosure on the 21st, this information has continued to affect market expectations, leading traders and downstream enterprises to form a consistent judgment on the subsequent tightening of supply.
On the demand side, rigid procurement is the main focus, making it difficult to generate strong driving force
The overall performance on the demand side was lackluster, failing to generate substantial driving force for the market. In late January, downstream industries generally maintained a pace of on-demand procurement, while traditional demand areas such as feed, leather, printing and dyeing were still in the seasonal off-season, with a production rate of less than 60% and low enthusiasm for stocking up in large quantities. Among them, the pesticide industry’s spring plowing and stocking up have not yet been fully launched, and the leather and printing and dyeing industries have limited digestion capacity due to sluggish terminal consumption. Only the pharmaceutical and chemical industries maintain a small amount of essential procurement, making it difficult to change the overall balance of market supply and demand.
The formic acid data analyst from Shengyi Society believes that, based on the current market supply and demand pattern, inventory levels, and industry expectations, the domestic formic acid market will continue to maintain a sideways consolidation trend in the short term. The implementation of the main equipment maintenance plan in Liaocheng, Shandong will become the core variable determining the subsequent market trend. If the maintenance is successfully implemented, the market supply will be substantially tightened. Coupled with the current industry’s background of reducing production and ensuring prices, the price of formic acid is expected to gain further upward space. On the contrary, if the maintenance plan is postponed or cancelled, the expectation of loose supply may rise again, and the price action force will significantly weaken.
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