Deterred Demand From the Downstream Market Dampens the Asian Formic Acid Price

Shandong, China- Amid the already constricted demand and weak market fundamentals from the end-user industries, the price of Formic acid has declined. This week, the cost of Formic Acid in China slipped to USD 635/ton FOB Qingdao and USD 588/ton Spot Ex-Shandong with a weekly declination of 8.89% and 9.53%, respectively. Upstream Methanol prices started to revive as trading across North and South Shandong accelerated, but weak demand from preservative enterprises dampened the Formic Acid prices. Plants in Henan Province may be under loss as some Formic Acid plants are undergoing a temporary turnaround due to the heatwave. However, it could not halt the decline in Formic Acid prices. In addition, the squeeze in profit is another threat to the significant Formic Acid producers. Feedstock Methanol prices remain tepid in East China, but the decline is slower than Formic Acid.

In the Indian market, the price of Formic Acid is continuously following a downtrend affected by ample supply and a weak trading environment. Amidst the declining demand from the downstream preservative industry, local Formic Acid manufacturers cut their production as stockpiling pressurized them to clear their existing stocks. Imports from China dropped drastically as sufficient supply in the region limits the interest of the suppliers for bulk purchasing. If we focus on the feedstock Methanol market, spot discussions remain stable in India. Still, they improved over the week as buyers eyed purchases looking at improved forward-looking demand and positive sentiments.

According to ChemAnalyst, the price of Formic Acid in the Asian market will witness a bullish trend prompted by a surge in feedstock Methanol price. Exports from China to the Asian and European regions will gain a stance with the revised cost for overseas suppliers. Logistics constraints with the rise in the gasoline market, transportation charges will upsurge. Inventories will remain tight, and the demand for new stocks will increase with strong consumption from the downstream preservative industry.