In early August, formaldehyde fluctuated and weakened. In mid August, the rebound of raw material methanol raised costs, and mainstream factories in Shandong raised their factory prices multiple times. The market experienced a corrective rise, and in late August, the market turned into a strong consolidation pattern with more volatility, slowing down the upward trend and widening the range. As of August 25th, the average price of formaldehyde in Shandong Province was reported at 1367 yuan/ton, an increase of 11.29% from August 11th.
Driving factor analysis
Cost side: Methanol spot market fluctuates widely, forming bottom support for formaldehyde, but with limited upward drive; The rise in methanol is transmitted to formaldehyde with a lag, and downstream acceptance of high prices is limited, resulting in increased resistance to price increases.
On the supply side: Some enterprises have moderately reduced their losses due to profit pressure, and the overall supply of goods is not tight, with moderate inventory accumulation; Losses will constrain further significant downward space, but without large-scale centralized maintenance, the supply elasticity is relatively high.
Demand side (core contradiction): Still in the traditional off-season of summer. Artificial board and urea formaldehyde resin are the largest downstream products, with high temperatures and heavy rainfall. The production of board factories is not high, and the orders for terminal furniture and decoration are relatively weak. Downstream products are mainly for immediate needs, and there is no proactive large-scale replenishment of inventory. The demand is difficult to sustain and expand, which limits the upward height.
Market forecast: In the short term, formaldehyde will mainly fluctuate within a range, with a strong but difficult to sustain a significant increase.
-At the end of August: The off-season has not completely ended, and the recovery of sheet metal production is limited. Formaldehyde is unlikely to experience a unilateral surge, and it is likely to fluctuate within the current range, with small local increases and decreases.
-Early September: With the weather turning cooler, the sheet metal industry is expected to gradually emerge from the off-season, and there is an expectation of replenishment downstream. Prices have a marginal upward momentum for repair, but the height of the rise depends on two factors: ① whether methanol can maintain a strong trend; ② The actual operating rate of the sheet metal factory has rebounded. If downstream production falls short of expectations, the rebound will be significantly reduced and will continue to fluctuate.
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