SunSirs: Upstream Reduced Production to Ensures Prices, and Formic Acid Price Was Stable with Support

Price trend

According to SunSirs' commodity market analysis system, the domestic formic acid market has recently shown a continuous sideways trend. As of January 2nd, SunSirs' benchmark price for 85% formic acid was 2,300 RMB/ton, unchanged from the same period last week (January 5th), a decrease of 20.96% compared to the previous month and a decrease of 22.03% compared to the same period last year.

Market Analysis

From the supply side, the formation of this stable market pattern began with the trilateral meeting resolution before January 5th. Three core formic acid producers in Liaocheng, Feicheng, and Jingzhou, Hubei, reached an agreement through negotiation to implement production cuts and price maintenance measures to varying degrees. From subsequent market performance, although the production cuts did not immediately change the overall loose supply situation, they effectively curbed the risk of price declines and sent a clear signal of price support. During this period, upstream companies maintained stable shipments, and although there was no significant increase in volume, they maintained a normal sales pace, and inventory levels showed a moderate downward trend.

Demand-side performance showed characteristics of phased changes. On January 6th, the market experienced a noticeable wait-and-see attitude from downstream buyers, who mainly focused on maintaining essential needs, resulting in a relatively sluggish trading atmosphere. However, as prices remained stable for an extended period, downstream companies' purchasing pace gradually stabilized. By January 12th, the market demand side had formed a stable purchasing pattern. It is worth noting that on the 12th, there was a slight price reduction for large orders from end customers, but this localized adjustment did not shake the overall firm price structure.

From a cost perspective, methanol, the main raw material for formic acid production, showed a fluctuating upward trend in the market during the same period. From January 4th to 9th, the price of methanol at East China ports rose from 2,245 RMB/ton to 2265 RMB/ton. This moderate cost support also provided favorable conditions for formic acid producers to maintain their prices. Considering the supply and demand relationship and cost factors, the current formic acid market has formed a balanced pattern of "ample supply but supported by production cuts, stable demand with orderly procurement, and moderate cost support."

Market Outlook

According to SunSirs' formic acid data analyst, based on the stable performance of both supply and demand, strong price support from manufacturers, and a healthy cycle of moderate inventory reduction, it is expected that the domestic formic acid market will continue its sideways consolidation trend with limited price fluctuations. Further attention should be paid to the continued implementation of upstream production reduction measures and the pace of further demand release downstream.

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