Paraformaldehyde

I. Recent Market Dynamics

1. Price Trends
- The domestic market price for polyoxymethylene (POM) has recently shown a slight upward fluctuation. In some regions, the mainstream transaction prices have increased by approximately 200-300 RMB/ton compared to the beginning of the month. The price increase varies slightly across different specifications, with POM at 96% purity experiencing a relatively more pronounced rise.
- Internationally, POM prices have also risen to some extent due to rising raw material costs and supply tightness in certain areas. Particularly in the Asian and European markets, price increases have ranged from 3% to 5%.

2. Supply Situation
- The overall operating rate of domestic POM production enterprises remains at a moderate level, approximately 65%-70%. Some enterprises have seen a decline in their operating rates due to equipment maintenance or raw material supply issues, leading to a slight reduction in market supply.
- Regarding imports, the volume of recently arrived cargo has remained relatively stable. However, due to rising international prices, the cost of imports has increased, dampening traders' enthusiasm for procurement, and import volumes have not shown significant growth.

3. Demand Situation
- Demand from downstream industries has shown divergence. The pesticide industry has entered its peak production season, leading to increased demand for POM, especially among manufacturers of herbicides and insecticides, whose procurement volumes have risen significantly.
- Demand in industries such as resins and coatings has remained relatively stable, with buyers adopting a demand-based purchasing strategy, providing limited support for POM prices.
- Demand from the pharmaceutical industry has maintained steady growth. However, due to the characteristics of the industry, the incremental demand is relatively small.

4. Cost Factors
- The price of the primary raw material, formaldehyde, has continued to rise recently. Influenced by higher prices and tight supply of upstream methanol, formaldehyde producers have faced increased costs, which in turn have driven up the cost of POM production.
- Costs related to energy and transportation have also increased, further compressing the profit margins of POM production enterprises and prompting them to raise product prices.

II. Analysis and Judgment

1. Reasons for Price Fluctuations
- On the supply side, the decline in enterprise operating rates and increased import costs have led to a reduction in market supply, which is one of the main factors driving price increases.
- On the demand side, the increased demand from the pesticide industry has provided strong support for price increases. In contrast, the stable or limited growth in demand from other industries has had a relatively minor impact on prices.
- Regarding costs, the rise in formaldehyde prices, along with increased energy and transportation costs, has raised the production costs of POM. To maintain profitability, enterprises have had to increase product prices.

2. Market Supply and Demand Relationship
- The current market supply and demand relationship is in a relatively tight balance. With supply slightly decreasing and demand increasing driven by the pesticide industry, market inventory levels are gradually declining, providing support for prices.

III. Forecast

1. Price Trend Forecast
- In the short term, POM market prices are expected to continue a slight upward trend. Driven by sustained high raw material costs and robust demand from the pesticide industry, enterprises have a strong willingness to maintain or raise prices.
- In the medium term, if upstream methanol prices remain stable or continue to rise, POM prices may have further room for growth. However, the extent of the increase may be constrained by the acceptance level of downstream industries.
- In the long term, as the peak production season for the pesticide industry concludes, demand may decline, potentially putting downward pressure on POM prices. Nevertheless, if significant changes occur on the supply side, such as further reductions in enterprise operating rates or a substantial drop in import volumes, prices may remain high.

2. Market Supply and Demand Forecast
- On the supply side, it is expected that enterprise operating rates will struggle to increase significantly in the short term, and import volumes will see limited growth due to cost pressures. Consequently, market supply will remain relatively stable or decrease slightly.
- On the demand side, demand from the pesticide industry will remain robust in the short term but will gradually slow down over time. Demand from the resin and coating industries is expected to remain stable, while demand from the pharmaceutical industry will continue to grow steadily. Overall, market demand will maintain a certain intensity in the short term, but the momentum for demand growth may weaken in the medium term.