The prices of Formaldehyde witnessed an upward trend in the USA market in the second week of February 2025 and increased by 3.0% as compared to the previous week. The increase in the prices was attributed to increased upstream pressure as Natural gas prices witnessed a continuous rise in the past few weeks putting pressure on the supply chain.  The upward pressure was also supported by regulatory uncertainties and evolving market dynamics. The EPA's finalized risk evaluation under TSCA has raised concerns over stricter regulations on formaldehyde production, handling, and applications, leading to cautious supply adjustments by manufacturers. Compliance measures and potential restrictions are driving up operational costs, contributing to price increases despite a decline in feedstock methanol costs.

Moving forward, the demand for Natural gas may rise leading to increased upstream prices. As the inventory levels of natural gas continued to decline in the European region, the production of Formaldehyde is expected to be impacted. While the demand is not expected to gain significant traction soon, the supply side disruptions may lead to increased prices of formaldehyde in the market.

In the current market, the supply dynamics of formaldehyde in the U.S. were facing potential disruptions following the U.S. Environmental Protection Agency's (EPA) finalized risk evaluation under the Toxic Substances Control Act (TSCA) on January 2, 2025. The EPA's conclusion that formaldehyde poses an unreasonable risk to human health under various conditions of use has triggered the risk management process, which could lead to stricter regulations on production, handling, and application. Manufacturers may need to implement compliance measures, including modifications to production processes, additional worker safety protocols, and possible restrictions on formaldehyde-containing products. These regulatory pressures could increase operational costs and impact supply availability. While production was impacted by increased Natural gas prices in the short term, uncertainty around future regulatory requirements may lead to cautious output adjustments by producers. Industries reliant on formaldehyde, such as construction and automotive, could experience supply chain constraints if stricter regulations limit production or increase costs, potentially influencing market pricing and long-term supply stability. Despite the decline in feedstock Methanol prices, the Formaldehyde prices increased amid the uncertainty in the market dynamics.

The demand in the U.S. market remained steady, driven by its applications in the construction and automotive sectors. In construction, demand was influenced by economic uncertainties, regional disparities, and high borrowing costs. Despite challenges, infrastructure investments and housing market resilience could sustain moderate demand. In the automotive sector, formaldehyde consumption remained stable, supported by a 3.8% increase in new vehicle sales in January 2025. With major automakers maintaining production levels, the demand for formaldehyde in vehicle interiors, coatings, and composite materials is expected to remain firm. However, supply chain fluctuations and material cost changes may impact future consumption trends.