SunSirs: High Inventory Levels Triggered a Price Reduction for Formic Acid

Price trend:

According to the commodity price analysis system of SunSirs, the price of formic acid has decreased recently. As of December 19th, the benchmark price of industrial-grade 85% formic acid tracked by SunSirs was 2,830 RMB/ton, a decrease of 2.75% compared to the same period last week (December 12th), a month-on-month decrease of 2.75%, and a year-on-year decrease of 4.07%.

Market Analysis

Supply side: Temporary contraction but limited support

Over the past week, the supply side continued to show a phased contraction. A manufacturer in Feicheng operated at low capacity, and a company in Liaocheng underwent plant maintenance throughout the week, directly leading to a reduction in market supply. In the short term, this somewhat eased the pressure of inventory reduction, but it did not change the overall pattern of moderately high inventory levels and failed to provide sustained support for prices.

Demand side: Weak demand and a wait-and-see attitude dominated market sentiment

Weak downstream demand was the core weakness in the market last week. Demand from downstream industries such as feed, leather, and pharmaceuticals has been sluggish recently. The feed industry was in a seasonal adjustment period, with weak demand growth from the livestock sector. Operating rates in the leather and textile industries remained low, and the pharmaceutical and chemical sectors were only maintaining rigid, needs-based purchasing. Amid expectations of falling prices, downstream manufacturers and distributors were generally adopting a wait-and-see attitude, lacking purchasing enthusiasm, creating a vicious cycle of "weak demand - falling prices - strong wait-and-see attitude," further exacerbating the market stalemate.

Inventory side: High inventory levels triggered price reduction actions

The fact that industry inventory levels were at a moderately high level was the key factor driving price fluctuations last week. Despite the continued contraction in supply, inventory levels significantly compensated for the supply shortage, and the weak supply-demand balance was gradually disrupted under the pressure of high inventory. On the 17th, manufacturers proactively lowered prices to reduce inventory.

Market Outlook

According to the data analyst at SunSirs specializing in formic acid, domestic formic acid market prices will continue to face downward pressure. The supply and demand stalemate remained unchanged, inventory pressure persisted, and downstream demand is unlikely to see substantial improvement in the short term. Therefore, prices are expected to fluctuate weakly in the short term, and further developments will depend on changes in market supply and demand.

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