SunSirs: Formaldehyde Prices Was Downward Under Pressure in 2025. Will They Rebound in 2026?

In 2025, the domestic formaldehyde market faced overall pressure due to intensifying supply-demand imbalances, with prices falling to their lowest levels in recent years. Looking ahead to 2026, expectations for a strong market rebound are weak; a more likely scenario is a pattern of "stabilization at the bottom and moderate recovery."

2025 Market Review: A Deep Correction Under Multiple Pressures

1. Annual trend: Rose to a peak, then fell back, hitting a low point at the end of the year.

According to data monitored by SunSirs’ commodity price analysis system, as of December 25th, the average price of formaldehyde in Shandong province was 1,040 RMB/ton, a decrease of 10.15% year-to-date. Prices briefly rose in the first quarter to reach their highest point of the year, but entered a clear downward trend from the second quarter onwards. Although there was some consolidation in the third quarter, the downward trend continued in the fourth quarter, reaching a five-year low.

2. Three core reasons behind the price decline

Weak support from the demand side: The largest downstream application of formaldehyde is in artificial boards (used to produce urea-formaldehyde resin, etc.), and its demand is closely related to the real estate market. The continued adjustment in the real estate industry in 2025 has led to weak demand from traditional major markets. Although there is some growth in demand from areas such as automotive interiors and engineering applications, this is insufficient to fully offset the decline in traditional markets.

Cost support weakens significantly: Methanol is the main raw material for formaldehyde production, accounting for over 60% of its production cost. In 2025, the methanol market itself will have ample supply and weakening prices, causing formaldehyde prices to lose crucial bottom-line support.

Increased internal competition within the industry: The formaldehyde industry has a low concentration of production capacity and numerous market participants. When demand is weak, companies, in order to maintain production and market share, are likely to adopt price-cutting strategies, further suppressing price levels.

2026 Market Outlook: Insufficient rebound momentum, expected to consolidate at low levels

Overall, the driving factors for a significant rebound in formaldehyde prices in 2026 are not yet apparent. The market is expected to continue digesting excess capacity and waiting for substantial improvements on the demand side.

1. Main growth constraints

Traditional main driver: Structural decline in demand for wood-based panels. Wood-based panels are the largest consumer market for formaldehyde, but a decline in future demand is almost certain, mainly due to the dual pressures of stricter mandatory standards and adjustments in the downstream real estate sector.

Policy-driven upgrades and reduced unit consumption: Starting June 1, 2026, E1-grade engineered wood products will be completely phased out, with standards upgraded to E0-grade or even the higher ENF-grade. This means companies must use more environmentally friendly adhesives, directly leading to a reduction in formaldehyde consumption per cubic meter of board.

The downstream industries are sluggish, resulting in weak overall demand: the artificial board industry is closely linked to the real estate sector. Currently, the real estate market is undergoing an adjustment period, with a decline in new housing starts, leading to weak overall demand for wood panels. This has resulted in fierce competition within the industry and frequent price wars.

2. Potential support and turning points

High-end and emerging sectors: stabilizers and new engines for demand. Although the demand in this segment is not as large as that for engineered wood products, its growth is certain and it is crucial for the future transformation of the industry.

Paraformaldehyde: It is an important downstream derivative of formaldehyde, stable in form and easy to transport. Its demand is linked to industries such as agriculture (glyphosate and other pesticides), automotive (engineering plastics POM), and electronics, and is less affected by the real estate market. Industry analysis predicts that its demand will maintain steady growth.

Melamine-formaldehyde resin: Demand shows a clear divergence. Traditional applications (such as impregnated paper) are under pressure due to the upgrading of wood-based panels. However, as a molding compound, demand is growing rapidly in areas such as new energy vehicle interior parts, high-end electrical appliances, and imitation porcelain tableware, becoming a bright spot.

Other industrial sectors: The application of formaldehyde in textile auxiliaries, pharmaceutical and pesticide intermediates, and leather tanning agents is relatively stable, forming another fundamental base of demand.

There is potential for fluctuations in costs: Methanol prices are affected by factors such as energy policies and import conditions. If there is a temporary increase in methanol prices in the future, it will drive up formaldehyde prices due to increased costs.

The production capacity structure continues to be optimized: Driven by environmental protection and safety policies, some outdated and fragmented production capacities will continue to exit the market, which will help improve the overall supply and demand landscape of the industry.

Recommendations for different market participants

For manufacturers: It is recommended to shift the focus from scale expansion to cost control and product upgrading. Focus on formaldehyde products with high concentration, low impurities, and suitability for high-end derivative production, in order to enhance competitiveness and avoid fierce competition in the low-end market.

For traders and downstream users: The market in 2026 will likely remain volatile within a range.  It is recommended to adopt a "small quantities, frequent purchases" strategy, building up inventory in stages when prices are low, and avoiding large-scale stockpiling at a single high price point. At the same time, closely monitor methanol prices and developments in real estate policies.

For investors: It's important to recognize that the formaldehyde industry has entered a mature stage, with overall stable growth. Investment opportunities may lie more in niche segments of the industry chain, such as high value-added specialty resins and environmentally friendly adhesives in the downstream sector, or efficient methanol production processes in the upstream sector.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.