SunSirs: As the Peak Season Arrives in September, Formic Acid Prices May Continue to Rise

Price trends

According to the Commodity Market Analysis System of SunSirs, the domestic market for 85% formic acid exhibited a fluctuating upward trend in August, characterized by initial stability at low levels, a stepwise rise, and a steady close at the end of the month; the price floor rose significantly throughout the period. At the start of the month, the market continued the sideways trend seen in late July, with prices at a yearly low and a benchmark price of 1,800 RMB/ton. Driven by multiple positive factors—including low inventory levels, plant maintenance, boosted exports, and market efforts to support prices—the market gradually broke out of the low-price range, with price levels steadily shifting upward. By month-end, the market was operating stably at a higher level, with a benchmark price of 2,100 RMB/ton, reflecting an overall pattern of fluctuating strength and a monthly increase of 16.7%.

Market trends in August were driven by the supply-demand landscape, resulting in distinct characteristics of a tug-of-war between market forces.

Overall, the supply side was characterized by a dynamic where the volume increases from resumed production were offset by reductions due to maintenance, resulting in periodic supply tightening. Early in the month, the planned restart of units previously under maintenance created expectations of increased supply, which exerted persistent downward pressure on prices and caused them to fluctuate at low levels; mid-month, concentrated maintenance on certain units counteracted the supply gains from restarts, tightening market availability—a factor that, combined with producers' efforts to hold firm on prices, provided key support for an upward trend. By month-end, a slight rise in industry inventories eased supply-side pressure somewhat, leading to market stabilization. Throughout the month, however, industry-wide inventories remained at low-to-moderate levels, providing fundamental, ongoing support for formic acid spot prices and effectively limiting the scope for price declines.

Overall, the demand side is characterized by weak baseline demand tempered by marginal positive factors—a dynamic that serves as a key constraint on market fluctuations. Throughout the month, operating rates among domestic downstream end-users remained low, and the pace of demand recovery was sluggish; the lack of sustained upward momentum meant that, for the most part, the market lacked the fundamental support needed for a sharp rally, causing prices to repeatedly settle into a state of weak, sideways equilibrium. However, periodic positive factors effectively drove prices upward: low price levels stimulated intermittent restocking by downstream buyers, while steady export orders and rising expectations for the traditional September peak season boosted market sentiment, revived trading activity, and propelled multiple rounds of price increases.

With the arrival of the peak demand season in September, prices are expected to continue their upward trend.

As the traditional peak demand season in September approaches, demand is expected to continue recovering; coupled with the industry's sustained inclination to support prices, the formic acid market is likely to maintain a stable-to-firm trend, with a low probability of significant volatility. Specific market developments regarding supply and demand still warrant close monitoring.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.