Price Trends:
According to monitoring data from SunSirs, during the latter half of April, the formaldehyde market exhibited a trend of retreating from high levels and fluctuating downward. As of April 27, the average price of formaldehyde in the Shandong region stood at 1,386 RMB/ton—a decline of 4.74% compared to mid-month—though it remains at a high level relative to the past year.
Driver Analysis
1. Weakening Cost-Side Support: Raw Material Methanol Prices Softened
Methanol serves as the primary feedstock for formaldehyde; consequently, its price trajectory directly dictates the cost baseline for formaldehyde production. During the latter half of April, the domestic methanol market experienced volatile downward pressure—driven by expectations of a loosening supply-demand balance—resulting in a decline in ex-factory methanol prices in certain regions. This development directly eroded the cost-based support for formaldehyde manufacturers. As raw material costs eased, downstream buyers gained increased bargaining power, thereby compelling formaldehyde producers to lower their quotations to align with these shifting cost dynamics—a fundamental factor underpinning the current round of formaldehyde price declines.
2. Sustained Weakness in Demand: Significant Decline in Demand from the Downstream Man-made Board Sector
The primary downstream applications for formaldehyde lie within the construction materials sector—specifically in products such as man-made boards and adhesives. The key factor dragging down the current market trend is precisely the drastic contraction in demand from the downstream man-made board industry. During the mid-to-late April period, man-made board manufacturers—hampered by sluggish demand in the end-user real estate and home renovation markets—maintained persistently low operating rates and significantly curtailed their procurement of formaldehyde. Compounding this situation was the approaching "May Day" holiday; downstream enterprises generally showed no immediate inclination to stockpile inventory ahead of the festivities, limiting their purchasing activity to strictly meeting immediate replenishment needs. Consequently, market trading volumes lacked the necessary momentum to expand, and any upward impetus for prices vanished completely.
3. Supply Side: "Reduced Output Failed to Reverse Weak Market Trend"; Enterprises Cut Margins to Clear Stock and Control Inventory
Although some formaldehyde manufacturers have proactively adjusted their operating rates—resulting in a certain reduction in market supply—this decrease has failed to provide any effective boost to the market, largely due to the precipitous decline in demand. Under the dual pressures of sluggish demand and accumulating inventories, formaldehyde plants across various domestic regions have been compelled to adopt a strategy of sacrificing margins to facilitate sales. By lowering quoted prices and offering expanded discounts, they aim to accelerate inventory turnover and maintain controllable stock levels—a move that has directly intensified the downward pressure on market prices.
Market outlook
The short-term downward trend has slowed, with the market primarily characterized by weak, sideways fluctuations. Short-term demand is unlikely to recover rapidly, and pre-holiday restocking activity remains insufficient; consequently, manufacturers are expected to continue offering price concessions to facilitate shipments. However, the recent decline has already partially priced in bearish factors, and current low price levels may attract limited restocking from end-users with immediate requirements. As a result, there is limited room for further significant price drops, and market movements are expected to remain largely range-bound at lower levels. Market participants should closely monitor trends in the methanol feedstock market, the pace of recovery in downstream demand, and the extent of adjustments on the supply side.
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