SunSirs: Supported by Strong Cost, Formaldehyde Prices Surged Over 22%

Since March, the domestic formaldehyde market has exhibited a dynamic characterized by strong cost support, rising export momentum, ample yet controllable supply, and steady, essential demand. Driven by a substantial surge in the price of methanol—the primary raw material—formaldehyde prices have generally trended upward amidst some volatility. This upward trajectory has been further bolstered by increased export demand, creating a dual positive impetus; however, the constraining effect of sluggish traditional downstream demand remains quite pronounced. Consequently, the market is marked by intense interplay between bullish and bearish forces, presenting an overall structural profile defined by "strong costs, weak demand."

Price trend

According to the SunSirs Commodity Market Analysis System, as of March 23, the average price of formaldehyde in the Shandong region stood at 1,262 RMB/ton, marking a sharp increase of 22.87% compared to the beginning of the month.

Market analysis

Raw Materials: Methanol prices have surged significantly, providing maximum cost support

Methanol serves as the primary raw material for formaldehyde production, and fluctuations in its price directly dictate the trajectory of formaldehyde production costs. This month witnessed a substantial surge in methanol prices; as of March 20, the price quoted by SunSirs stood at 3,140 RMB/ton—a staggering increase of 42.73% compared to the beginning of the month. This upward pricing pressure continues to ripple through the formaldehyde industry chain, compelling formaldehyde manufacturers to passively raise their own quotations in response.

In the short term, the geopolitical premium on methanol persists, and the tight supply landscape is unlikely to ease rapidly; this is expected to continue providing strong cost support to the formaldehyde market, thereby limiting the downside potential for formaldehyde prices.

Export Front: Demand continues to rise, alleviating domestic supply pressure

Demand for formaldehyde exports continues its upward trajectory, emerging as a pivotal force in stimulating market demand and alleviating domestic supply pressures. According to the latest customs data, formaldehyde exports in January and February 2026 established a solid foundation for growth; with export momentum continuing to build in March, the sector is exhibiting a healthy trend characterized by "year-on-year increases and steady month-on-month growth." Specifically, data reveals that in January 2026, China's formaldehyde export volume reached 236.3 tons—marking a substantial year-on-year surge of 106.74%—with an export value of 962,451 RMB. In February, export volume stood at 124.47 tons, representing a year-on-year increase of 5.64%, with an export value of 489,681 RMB. Although export volumes in February saw a slight dip compared to January due to the influence of the Lunar New Year holiday, they nevertheless maintained positive year-on-year growth. Furthermore, bolstered by the resumption of domestic production and the smooth flow of logistics in March, export volumes are projected to rebound significantly relative to February, thereby further optimizing the balance between supply and demand within the domestic formaldehyde market.

The sustained increase in export demand has effectively absorbed a portion of domestic production capacity and alleviated domestic supply pressures. Simultaneously, it has provided a degree of support for formaldehyde prices; combined with rising raw material costs—creating a dual positive impetus—these factors have collectively driven the formaldehyde market to trend with a strong, albeit fluctuating, bias this month.

Supply and Demand Fundamentals: Overall supply is ample and manageable, while traditional demand remains weak

Supply Side: Formaldehyde supply remains stable—generally ample and manageable. Total supply is sufficient to meet market demand, with a certain degree of flexibility for adjustment; no significant supply shortages have emerged. As temperatures rise, manufacturers' production enthusiasm has increased, leading to a gradual rise in supply volume; however, the overall supply remains relatively loose, thereby imposing some constraints on upward price movements.

Regarding demand: Support remains moderate and has failed to effectively align with rising production costs, emerging as the primary factor constraining any significant upward movement in formaldehyde prices. The engineered wood industry—the largest consumer market for formaldehyde—witnessed lackluster demand this month. Influenced by adjustments within the real estate sector and the upgrading of mandatory standards for engineered wood (specifically, the phasing out of the E1 grade and the widespread adoption of E0/ENF grades), the volume of formaldehyde consumed per unit of board material has declined. Compounding this situation, the peak spring renovation season has yet to fully kick off; consequently, operating rates among engineered wood manufacturers remain subdued, and their willingness to take delivery is modest. Most firms are limiting their purchases to immediate, essential needs, thereby exerting only limited upward pull on formaldehyde demand. Meanwhile, the adhesives industry—weighed down by sluggish end-market demand in the real estate sector—is also exhibiting a weak demand trend, further dragging down traditional demand for formaldehyde.

Market Outlook

In the short term, methanol prices are expected to remain elevated, influenced by geopolitical tensions. With cost support from methanol persisting and export demand steadily rising, the formaldehyde market is projected to maintain a volatile yet generally firm trend; the extent of any price increases will depend on fluctuations in methanol prices.

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