Data from the SunSirs spot market analysis system indicates that the domestic formic acid market has recently followed a stepped upward trend; the price of 85% industrial-grade formic acid rose from 1,900 RMB/ton on August 17 to 2,000 RMB/ton on August 20, an increase of 5.3%

Supply Side: Offsetting Effects of Maintenance and Resumption; Dynamic Capacity Adjustment

The supply side was the key driver of price fluctuations last week. Early in the week, some previously idled formic acid production units resumed operations, releasing capacity; simultaneously, other units began scheduled maintenance. These opposing factors offset each other, resulting in no significant shift in the overall operating rate and maintaining a dynamic balance between supply and demand. By midweek, however, concentrated maintenance across several units led to a temporary tightening of supply, prompting manufacturers to capitalize on the situation by raising prices.

Inventory and Demand: Low-to-Moderate Inventory Provided Support, While Weak Downstream Recovery Limited Upside Potential

Inventory levels served as a key factor supporting prices last week. Mid-week, industry inventories remained at low-to-moderate levels; concentrated maintenance at certain facilities further constrained the supply of marketable stock, providing a fundamental basis for manufacturers to hold firm on prices. Although inventories rebounded to moderate levels by the latter half of the week, no significant backlog developed, allowing prices to find support at the 2,000 RMB/ton mark. However, demand remained consistently weak. There were no clear signs of a recovery in downstream consumption; purchasing activity was driven primarily by expectations of price hikes and manufacturers' concerted efforts to support prices, rather than by any substantive expansion in actual demand.

Exports and Price Support: Robust External Demand as a Key Driver

Solid export orders for some manufacturers have led to tighter domestic supplies. Coupled with concerted efforts by producers to prop up and raise prices, this has effectively stimulated downstream purchasing activity, creating a positive feedback loop: export-driven supply diversion → tightened domestic supply → price hikes → downstream buying in anticipation of further increases.

This price rally, driven by price-support strategies and exports, is partly sentiment-driven and temporary in nature. Should the pace of export orders slow or the industry consensus on maintaining prices weaken, the lack of solid demand-side support would increase the risk of a price pullback.

Market Outlook: Intensifying tug-of-war at the 2,000-RMB mark; focus on demand and plant operations.

Overall, the formic acid market saw a modest, step-wise rise last week, driven by the combined effects of maintenance-related supply constraints, low-to-moderate inventory levels, steady exports, and producers' efforts to support prices; however, the lack of a substantial recovery in end-user demand remained the primary limiting factor. Looking ahead, the 2,000 RMB/ton mark will serve as a critical battleground for bulls and bears, with future trends depending on the operating status of major production units, inventory fluctuations, and the pace of downstream procurement.

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