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Improvement of Trading Fundamentals Stabilizes Formaldehyde Offers Globally

Improvement of Trading Fundamentals Stabilizes Formaldehyde Offers Globally

Improvement of Trading Fundamentals Stabilizes Formaldehyde Offers Globally

  • 18-Aug-2022 12:03 PM
  • Journalist: Harold Finch

Hamburg, Germany- After a continuous drop in prices over the past few weeks, Formaldehyde prices started to gain a stance with stabilization of cost in Germany. Prior high Formaldehyde prices in the region caused the supplier to limit their purchasing activities which dropped the prices amidst the solid wait-and-see sentiment. Still, high energy and utility costs held the prices from falling further. With the week ending on 12th August, the price of Formaldehyde in Germany stabilizes at USD 592/ton CFR Hamburg.

Oscillations in feedstock Methanol also affected the prices of Formaldehyde in the regional and international markets. Downstream preservative industries remained under pressure due to rising utility tariffs and surging demand from the consumer.

In the US market, the general drop in prices despite high inflation was due to several reasons, including weaker demand due to high cost, a sharp decline in the global oil prices in the past few weeks and suspension of taxes on gasoline in a handful of states. The gas price drops benefitted the economy as industrialists faced less pressure to pass energy costs on to their consumers. In terms of the downstream market, preservative industries remained under pressure from high utility and energy costs.

In the Indian market, prices started to show an upward trend due to the utilization of existing inventories and tepid demand for new stocks. However, the prices are still lower, prompted by weak sales and revenue among the downstream ventures. Due to deteriorating demand, formalin production has dropped significantly in India. Several market participants agreed that some of the importers were trying to short-sell the material as it could fetch them better netback amid falling ex-tank discussions.

According to ChemAnalyst, the price of Formaldehyde will likely surge due to constrained supply against rising demand from the downstream preservative industry in the short term. Logistics constraints and surging transportation costs will be more likely to increase the prices for the overseas market. In Europe, the Petrochemical market will remain affected by increasing utility and energy values, affecting the price trend.

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