For the Quarter Ending September 2023
In Q3 2023, the price trend of Formic Acid showcased a bearish price trend in the wake of dampening demand from the downstream enterprises and slow market offtakes when compared with the previous quarter. In the USA, the price of Formic Acid faced a downward trend this quarter in the wake of restricting purchasing and weak market fundamentals. With the region's slow economic growth, regional demand remains sluggish in the USA. Increased competition among Formic acid producers and suppliers from Germany and China led to price wars as companies lowered prices to gain market share. Demand for the end-user preservative industry also remains sluggish in the wake of limited trade among the significant manufacturing units, affecting the price trend. Producers are minimizing operational rates and inventories in order to avoid stockpiling in the region. During July 2023, the price of Formic Acid in the USA declined to USD 978/ton FOB Texas. In terms of feedstock, the Methanol market continues on the softer side, lowering their production costs, resulting in such a pricing trend.
This quarter, the price of Formic Acid in the Asia Pacific region declined when compared with the previous quarter amid lackluster market fundamentals and limited purchasing activities in the region. In China, low market exchange rates and slow offtake of Formic Acid remain the main reasons for the cost reliability of the product. Suppliers are buying the cargoes according to the prerequisite from the downstream enterprises. The domestic Formic acid market price fell with low market fundamentals in the region. Recently, the price of raw material Methanol was weak and stable, and the market trading fundamentals were also feeble, and the trades were majorly on a need-to basis. The downstream demand from the end-user preservative market was restricted, and inquiries and procurement in the formic acid market were minimal. Reduced profit margins and revenue across major production units had an impact on the price trend for Formic Acid. During September, the price of Formic Acid in China declined to USD 565/ton FOB Qingdao.
In the European market, the price trend of Formic Acid witnessed a bullish price trend in July 2023 and August 2023 amid high purchasing fundamentals and an increase in demand from the downstream market. Significant Formic Acid producers increase the prices in the wake of rising product demand and gradual increases in purchasing activities. However, exports of Formic Acid from Germany to other European regions traded high due to limited inventories to cope with the market requirement—the demand for Formic Acid from the downstream preservative industries elevated with the healthy demand for fresh stock. In terms of the feedstock market, Methanol prices also surged with high market fundamentals and higher bids and offers from the suppliers to the buyers. However, the Formic Acid prices declined in September 2023 due to sufficient accumulation of inventories among the storage units, which declined the quotations in order to attract buyers for bulk purchases. In Sept 2023, the Formic Acid prices in Germany declined to USD 1078/ton FOB Hamburg.
In the third quarter of 2023, the market fundamentals of Formic Acid in Saudi Arabia were observed to be on the lower end in the wake of sluggish downstream purchases and cautiously operating enterprises as per the end-user requirement. In Saudi Arabia, the price trend reflected declining market dynamics and feeble market fundamentals. This quarter's Formic Acid market is characterized by slow demand growth and weak market support. With restricted trades among the major production units, Saudi Arabia's imports of Formic Acid from Germany and China have also decreased. Supplier bids and proposals have fallen, and suppliers are hesitant to increase the price trend. In August 2023, the price of Formic Acid in Saudi Arabia declined to USD 1003/ton CFR Jizan. In the Middle Eastern region, there has been no improvement in demand for the downstream preservative industries, and several Formic Acid makers are choosing to curtail product output in line with the sluggish purchases for fresh stocks.
For the Quarter Ending June 2023
When compared with the previous quarter, the Formic Acid market remained lackluster, with low market fundamentals and high product inventory. The downswing in the price trend was attributed to limited buying sentiments and weak cost support from the downstream market. Market sentiment over the weakening global economy, recession fears, and continued banking sector turmoil outweighed concerns about OPEC+'s supply cuts, dragging the outlook for Petrochemical prices lower. The demand for Formic Acid from the downstream preservative market plunged, and the trades were majorly on a need-to basis. Exports of Formic Acid from the US to the South American region also declined with limited requirements for fresh stock. In terms of the upstream market, limited cost support from Methanol declines the production cost of Formic Acid. During May 2023, the price of Formic Acid in the US declined to USD 999/ton FOB Texas. The demand remained unresponsive to the recent talks about stabilization, and uncertainties on the cost side lingered; the rising import offers drove cautious optimism on the part of sellers.
Asian Formic Acid markets gained a stance this quarter in the wake of rising Ex-quotation prices and tepid downstream market enterprises. Due to weak demand and decreased spot purchase activity, trade activity was found to be subdued. In Q2 2023, the demand outlook for Formic Acid remains feeble when compared with Q1 2023. In terms of the feedstock market, Methanol prices in the vicinity remain sluggish, and the purchases were on an immediate basis. Exports of Formic Acid from China to India and other Asian regions traded moderately as per the consumer's requirement. The demand for Formic Acid from the downstream preservative industries remains weak, and uncertainty remains among the suppliers about market recovery. In the Chinese market, the fresh stock requirement for Formic Acid remained limited, and market players remained skeptical about increasing the prices. During May 2023, the price of Formic Acid in China declined to USD 719/ton FOB Qingdao. In terms of inventories, the accumulation of stocks and limited demand for fresh stocks hampered the trading fundamentals in the region.
In Q2 2023, the market fundamentals for Formaldehyde remain strong in Q2 2023 with an increase in purchasing activities from the downstream ventures. However, a price slump in May 2023 was observed due to an increase in production rate among the significant manufacturing units. Nevertheless, the Formic Acid market witnessed a bullish price trend with an increase in trading fundamentals. Due to increasing bids and offers for formic acid in the vicinity, significant producers increased the pricing for the local suppliers. With strong product interest, there is insufficient accessibility to fulfill the geographical demand from the German market, which drives up prices. Notwithstanding a downward adjustment in the market for feedstock Methanol, a robust downstream industry helped to strengthen the Formic Acid purchasing fundamentals. Regarding inventories, the price of Formic Acid was affected by a high demand for new stock and a dearth of available stock. Formic acid exports from Germany to the European market increased as a result of more competitive bids and offers among the major manufacturing units.
The price of Formic Acid in the Middle Eastern market gained a firmer stance in April 2023 and May 2023 in the face of a rise in regional demand and healthy imports of premium cargo from China and Germany. After Labour Day, the downstream recovery seemed optimistic, and the demand for formic acid increased. In the formic acid market of Saudi Arabia, more rigid expectations have taken the stage. Regional vendors plan to raise prices in May, citing more product spot talks and supply reductions. Inflows of cargoes of Formic Acid from Germany and China also traded strongly in this quarter. However, in June, the market experienced a price drop in the face of limited trading fundamentals and weak market fundamentals. The Methanol- Formic Acid spread contracted, narrowing the profit margin and sales among the significant producers. The inflows of premium Formic Acid cargo declined as the market was self-sufficient with the product availability, declining the price trend. The price trend of USD 1048/ton CFR Jizan was observed in Saudi Arabia during June 2023.
In the US market, the Formic Acid prices followed a bullish price trend with an uptick in trading activities. However, the price attained a steady trend towards the end of the quarter. The healthy purchasing activities were aided by low product inventories and higher product bidding. The demand for the new stocks increased with rising spot price discussions. In the wake of severe weather conditions, the production rate of Formic Acid remains impacted in H1 2023, along with rising power charges. In the meantime, several Gulf Coast producers reduced operation rates due to the Arctic blast. In Jan 2023, the price of Formic Acid in the US market surged to USD 1026/ton FOB Texas.
In Q1 2023, the price of Formic Acid in the Asia Pacific region declined in the first two months in the wake of being affected by limited trading and gradual utilization of inventories. The demand remained unresponsive to the recent talks about stabilization, and uncertainties about the costs side lingered. In China, trading activities slumped with the Lunar New Year holiday, and declining demand further supported the bearish price trend. In Feb 2023, the Formic Acid price in China declined to USD 672/ton FOB Qingdao. Towards the end of the quarter, the trading activities picked up the pace, and the low Formic Acid operating rate and contracted supply increased the price trend. The downstream preservative market also fluctuated on a narrow range with continuous product utilization from the consumer’s end.
In the European market, the price of Formic Acid declined in January due to adequate stocks held from previous months. In fact, with rising demand and healthy purchases for fresh stocks, the price trend gained a stance in Feb 2023 and March 2023. In Germany, continuous utilization of inventories resulted in higher production rates among the enterprises to cope with the downstream preservative demand. Spot discussions of Formic Acid increased, and major producers increased their export prices for the European and Asian markets. In March 2023, the Formic Acid price surged to USD 958/ton FOB Hamburg. Freight charges struggled with low transportation costs and sufficient container availability.