According to the Commodity Market Analysis System of Shengyi Society, the domestic formic acid market has shown a gradual upward trend recently. As of March 23, Shengyi Society’s 85% industrial grade formic acid was 3000 yuan/ton, an increase of 9% compared to the same period last week (March 16), a month on month increase of 23%, and a year-on-year decrease of 9.77.
Continuous contraction on the supply side
Starting from March 19th, some production enterprises have temporarily suspended production, resulting in a continuous contraction of effective supply in the market. Coupled with the existing trend of supply reduction in the market, the expectation of tight supply is gradually rising. In addition, market news shows that major production enterprises in Shandong Province plan to carry out maintenance on a total of 350000 tons of formic acid plants in March, which further strengthens the expectation of supply contraction. On March 23, data showed that the operating rate of the domestic formic acid market has decreased, the market supply continues to decrease, and inventory also shows a continuous downward trend. The tight supply-demand balance pattern has officially formed, providing strong support for a significant price increase. At the same time, the international market environment also has an indirect impact on the domestic supply side. The Middle East conflict has led to soaring energy and raw material costs, and European chemical companies such as BASF have raised formic acid prices, further driving the global formic acid market to shift its focus and providing external support for domestic manufacturers to adjust prices.
Good performance on the demand side
Since mid to late March, the shipment situation in the formic acid market has remained good, with downstream procurement following up on demand, sufficient support for essential needs, smooth product distribution channels, effectively driving production enterprises to reduce inventory and providing confidence for manufacturers to raise prices. From the perspective of the international market, the price of formic acid abroad rose significantly in mid to late March, which led to a significant increase in domestic demand for formic acid exports. Especially in emerging markets in Southeast Asia such as Vietnam, which have a high dependence on Chinese formic acid, the growth of export demand has further amplified the supply-demand gap in the domestic market. The combination of internal and external favorable factors has prompted domestic manufacturers to continuously raise the ex factory price of formic acid.
The formic acid data analyst from Shengyi Society believes that in mid to late March, the domestic formic acid market price gradually shifted from stable consolidation to sustained upward trend. The core logic lies in the resonance between the continuous contraction of the supply side and the steady improvement of the demand side, coupled with the driving force of international market price increases and the support of manufacturer maintenance expectations, promoting the market supply and demand pattern to shift from dynamic balance to tight balance, and successfully breaking through the integer threshold of 3000 yuan/ton. In the future, with the implementation of maintenance plans by some manufacturers at the end of the month, the market supply will further shrink. Coupled with the continued transmission of favorable overseas markets and the release of domestic export demand, there is still room for further increase in formic acid prices. Meanwhile, specific attention still needs to be paid to the impact of geopolitical changes on energy and raw material costs, changes in downstream demand, and the implementation of maintenance plans,
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