SunSirs: Demand for Formic Acid Was Weak, and Prices Were Caught in a Tug-of-War Between Supply and Demand

Price trend

According to the commodity market analysis system of SunSirs, the formic acid market has been fluctuating and weakening recently. As of September 15, the SunSirs benchmark price of domestic industrial-grade 85% formic acid was 3,100 RMB/ton, down 3.73% from last week (September 8), down 6.63% from the previous month, and up 15.89% from the same period last year.

Analysis review

The formic acid market experienced a shift from expected support to actual weakness

From September 8th to 10th, the market focused on the expected supply contraction caused by the Liaocheng factory maintenance plan. Although insufficient downstream production capacity utilization constrained domestic demand, the robust performance of the export market provided some support, and prices temporarily balanced under the supply-demand game. During this period, market sentiment was cautiously optimistic, and traders generally adopted a wait-and-see attitude, awaiting the completion of the maintenance.

On September 11, the price of formic acid was reduced by 120 RMB/ton. The operating rates of major downstream application fields such as agriculture, leather, and chemicals continued to run at a low level, and terminal purchasing demand was weak; secondly, the maintenance plan of the Liaocheng factory failed to be implemented as scheduled, and the market's expectation of supply contraction was dashed, which led to the frustration of traders' confidence. They generally entered a wait-and-see state with cash, and the market trading atmosphere became deserted.

Among the major downstream industries for formic acid, the agricultural sector was temporarily undergoing seasonal adjustments, resulting in weak growth in demand for feed additives. The leather and textile industries, impacted by sluggish end-user consumption, have seen operating rates remain below 60%. While demand remained strong in the chemical and pharmaceutical sectors, procurement has slowed, with an overall "on-demand" approach. This combined effect of weak demand across multiple sectors has significantly reduced the domestic market's ability to absorb the demand.

Market outlook

SunSirs’ Formic Acid Data Analyst believes that: from the anticipation for the "Golden September and Silver October" peak season in early September to the concern about weak demand in mid-month, traders' mentality has undergone a rapid change. The formic acid market is in a weak and volatile pattern. In the short term, the market is likely to maintain the stalemate, and it is necessary to closely track the progress of maintenance plans and the breakthrough opportunities brought about by changes in downstream demand.

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