SunSirs: Driven by Dual Momentum in Supply and Demand, Formic Acid Prices Were Gradually Rising

Price trend

According to the SunSirs Commodity Market Analysis System, the domestic formic acid market has recently exhibited a gradual upward trend. As of March 23, the SunSirs price for 85% industrial-grade formic acid stood at 3,000 RMB/ton—an increase of 9% compared to the same period last week (March 16), a month-on-month rise of 23%, and a year-on-year decline of 9.77%.

Market analysis

The supply side continued to contract

Starting March 19, the temporary shutdown of production units at select manufacturing facilities led to a continuous contraction in effective market supply. Compounded by a pre-existing trend of reduced supply, expectations of a tightening market—characterized by scarce availability—have gradually intensified. Furthermore, market intelligence indicates that major producers in the Shandong region, collectively operating formic acid facilities with a total capacity of 350,000 tons, have scheduled maintenance shutdowns for March. This expectation has further reinforced forecasts of a shrinking supply. Data from March 23 confirmed that domestic operating rates for formic acid production have indeed declined; consequently, market supply continues to diminish, and inventory levels show a persistent downward trend. A delicate equilibrium between supply and demand has thus officially taken shape, providing robust support for a significant upward movement in prices. Concurrently, the international market environment is exerting an indirect influence on the domestic supply side; conflicts in the Middle East have triggered a surge in energy and raw material costs, prompting European chemical giants—such as BASF—to raise their formic acid prices. This move has further shifted the global formic acid market's pricing center upward, thereby providing external justification for domestic manufacturers to adjust their own pricing strategies.

Demand-side performance was strong

Since mid-to-late March, sales performance in the formic acid market has remained consistently robust. Downstream sectors have maintained a demand-driven procurement approach, bolstered by ample support from essential consumption needs. With product distribution channels operating smoothly, manufacturers have successfully reduced their inventories—a development that has provided them with the confidence to raise prices. On the international front, overseas formic acid prices surged significantly during the latter half of March; driven by this trend, expectations for domestic formic acid export demand have risen markedly. This is particularly true for emerging Southeast Asian markets—such as Vietnam—which exhibit a high degree of reliance on Chinese formic acid. The growth in export demand has further widened the supply-demand gap within the domestic market; the convergence of these dual favorable factors—both domestic and international—has prompted domestic manufacturers to continue raising their ex-factory prices for formic acid.

Market outlook

According to analysts at SunSirs, the domestic formic acid market shifted from a stable consolidation to a sustained upward trend in mid-to-late March. The core logic lies in the combined effect of a continued contraction in supply and a steady improvement in demand, coupled with rising international prices and anticipated factory maintenance shutdowns. This pushed the market supply-demand balance from dynamic equilibrium to tight equilibrium, successfully breaking through the 3,000 RMB/ton mark. Looking ahead, as some manufacturers implement their maintenance plans at the end of the month, market supply will further contract. Coupled with the continued positive impact of overseas markets and the release of domestic export demand, formic acid prices still have room for further increases. However, it remains crucial to monitor the impact of geopolitical changes on energy and raw material costs, changes in downstream demand, and the implementation of maintenance plans.

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