Formic acid

Formic Acid Market Intelligence Report (July 29, 2026)

I. Recent Price Trends
1. Benchmark Price Fluctuations
- As of July 24, 2026, the Business Network’s benchmark price for formic acid stood at RMB 1,900/ton, down 5.94% from RMB 2,020/ton on July 1—hitting a new annual low and falling within the lowest range observed over the past three years.
- As of July 26, market quotations indicated that industrial-grade (85%) formic acid traded in the range of RMB 2,350–2,800/ton, while high-purity (99%) formic acid fetched RMB 7,000–7,400/ton, reflecting pronounced regional price differentials.

2. Monthly Price Trajectory
- Late June to mid-July: Prices declined continuously from RMB 2,550/ton to RMB 2,100/ton—a 17.65% drop—primarily driven by weak demand and accumulating inventory.
- Late July: Prices briefly stabilized around RMB 2,300/ton, but fell below RMB 2,000/ton again on July 24, signaling intensifying supply-demand imbalance.

II. Supply-Demand Analysis
1. Supply Side
- Capacity Contraction: Affected by scheduled maintenance at major production facilities and natural gas supply constraints, China’s formic acid operating rate dropped to 72.9% in July—a 8.9 percentage-point decline month-on-month—and output decreased by 9.0% to 10,520 tons.
- Inventory Drawdown: As of August 1, factory inventory declined to 2,900 tons, down 43.1% month-on-month—the lowest level in three years—yet short-term oversupply pressure remains.

2. Demand Side
- Weak Domestic Demand: Domestic formic acid consumption in H1 2025 declined 5.0% year-on-year; traditional end-use sectors—including leather tanning and pesticide manufacturing—remained sluggish, with end-users placing only small, sporadic purchase inquiries.
- Strong Export Demand: Export orders are booked through September, with the Netherlands, Turkey, and India as key destinations; overseas demand has become the critical support for pricing.

III. Cost and Profitability
1. Raw Material Prices
- Methanol—the primary raw material for formic acid—maintained a benchmark price range of RMB 2,400–2,500/ton; sulfuric acid prices remained stable, limiting cost-side pressure.

2. Enterprise Profitability
- With prices falling below RMB 2,000/ton, industry-wide average gross margin compressed to under 5%; some small- and medium-sized enterprises are now operating at a loss, prompting production cuts and price stabilization efforts.

IV. Market Drivers
1. Short-Term Catalysts
- Surging Exports: Robust overseas demand has accelerated inventory drawdown, supporting expectations of price rebound.
- Supply Disruptions: Restart timelines for major producers’ facilities are delayed, potentially widening near-term supply gaps.

2. Long-Term Headwinds
- Overcapacity: China’s formic acid capacity utilization rate remains below 60%, indicating persistent structural oversupply.
- Slow Demand Recovery: Against the backdrop of a muted domestic economic recovery, end-user industries show limited willingness to expand capacity.

V. Price Forecast and Strategic Recommendations
1. Price Range Outlook
- Short Term (1–2 weeks): Supported by export orders, prices may rebound to RMB 2,200–2,400/ton—but inventory restocking pressure warrants caution.
- Medium Term (1–3 months): Should domestic demand remain sluggish, prices could retreat further to RMB 1,800–2,000/ton—testing the cost floor.

2. Strategic Recommendations
- Producers:
Optimize export channels and secure long-term orders to diversify risk.
Coordinate production cuts to stabilize pricing and avoid irrational price competition.
- Downstream Users:
Procure based on immediate operational needs; avoid buying at peaks. Leverage current low prices to build safety stock.
- Traders:
Monitor regional price spreads and flexibly allocate inventory. Consider light-position trading for short-term rebounds.

VI. Risk Alerts
1. Supply-Side Risk: Major producers resume operations earlier than expected, triggering sudden supply surge.
2. Demand-Side Risk: Overseas demand unexpectedly weakens due to trade policy shifts or adverse exchange rate movements.
3. Cost-Side Risk: Sharp rise in methanol prices significantly compresses profit margins.