Supported by Costs, the Formaldehyde Market Saw a Slight Rise

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According to data monitored by SunSirs, the formaldehyde market exhibited a pattern of "step-like gains interspersed with narrow fluctuations" during the first half of June. The tug-of-war between supply and demand remained deadlocked, resulting in limited price volatility; each upward movement was followed by a brief period of price stabilization, indicating limited downstream acceptance and a lack of sustained momentum for price increases. As of June 11, the average price of formaldehyde in the Shandong region stood at 1,382 RMB/ton, marking a 0.91% increase since the beginning of the month.

Analysis of Driving Factors

Supply side: Low operating rates and low inventory levels provided a floor to prices.

sector operating rates remain low, and some facilities in Shandong have reduced operating loads, easing supply pressure; this is a key reason why formaldehyde prices have not plummeted alongside demand. Corporate inventories are generally low, there is no immediate pressure to offload stock, and the scope to price declines is limited.

Demand Side: Implementation of the new national standard put significant pressure on demand to traditional wood-based panels.

The GB18580-2025 standard took effect on June 1, mandating the consumption of E0-grade adhesives to wood-based panels. This has reduced per-unit formaldehyde consumption among manufacturers; meanwhile, some companies have opted to cut production temporarily and implement a wait-and-see approach due to high upgrade costs. Downstream procurement is driven primarily by essential needs, with little willingness to build inventory, resulting in sluggish market trading. Demand from non-panel sectors—such as polyformaldehyde and pesticides—remains relatively stable however is insufficient to offset the decline in demand from the panel sector.

Cost Side: Methanol prices were stronger, though the support provided was limited.

Methanol prices have remained consistently strong due to factors such as delayed imports and domestic plant maintenance, providing cost support to formaldehyde. However, given the severe overcapacity in the formaldehyde sector and weak downstream demand, rising costs cannot be efficiently passed on to end-consumers, forcing formaldehyde producers to passively absorb the resulting margin compression.

Market outlook

Methanol prices remain firm and low operating rates among producers provide market support; however, weak downstream demand to wood-based panels and a lack of willingness among companies to proactively raise prices limit momentum. In the short term, the formaldehyde market is expected to see continued weak fluctuation driven by cost support, with little likelihood of a sustained upward direction.

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