In the second half of May, there was a shift in the formaldehyde market pattern, showing a trend of bottoming out and rebounding, completely reversing the continuous downward trend since April. As of May 26th, the average price of formaldehyde in Shandong Province was reported at 1377 yuan/ton, an increase of 1.75% from the beginning of the month.

Driving factor analysis
1. Supply side: Proactive production reduction under continuous losses is the core support for price rebound
In mid May, the entire formaldehyde industry suffered serious losses, and manufacturers voluntarily reduced their operating rates. The national formaldehyde operating rate fell from around 50% in early April to 25% -30% in late May. The supply side contracted significantly, and the supply-demand pattern shifted from loose to tight balance, providing the most core underlying support for price rebound.
2. Demand side: The marginal improvement at the end of the off-season is the core catalyst for price rebound
In late May, the traditional off-season in the sheet metal industry came to an end, and some southern sheet metal manufacturers began stocking up in advance for the decoration peak season in late June, resulting in a clear marginal improvement in demand; At the same time, formaldehyde prices fell to a low level throughout the entire cycle, and downstream adhesive and coating manufacturers concentrated on replenishing inventory at low prices, releasing essential needs in a concentrated manner, directly driving a rapid rebound in prices.
3. Cost side: Methanol stabilizes at a low level, and manufacturers’ willingness to raise prices has significantly increased
In late May, methanol prices fluctuated at a low level without a significant downward trend, and cost support remained stable. Formaldehyde manufacturers no longer needed to hedge against cost declines by lowering prices, and their willingness to raise prices significantly increased. At the same time, the rebound in formaldehyde prices has driven processing profits to gradually recover from severe losses to near breakeven, and manufacturers have further strengthened their price push, forming a positive cycle of price rebound.
Market forecast:
It is expected that the formaldehyde market will experience strong fluctuations, with room for rebound and clear resistance above.
Fundamentals: The pattern of supply contraction will not change in the short term, and manufacturers have a strong willingness to raise prices; The traditional decoration peak season is approaching, and the marginal improvement on the demand side will be further enhanced; Supported by the decrease in port inventory and maintenance of some facilities, methanol still has a slight upward potential in the short term, with stable cost support.
Technical aspect: The short-term downward trend has been completely reversed, with the 10 day moving average turning upwards and prices above all short-term moving averages. A bullish trend has formed, and upward momentum still exists; Around 1420 yuan/ton above is the high point in mid April, which is also the pressure level of the 60 day moving average, with certain resistance and limited rebound height.