Formic Acid Prices Explained

Formic acid prices are still in a bearish market due to weaker demand from downstream businesses and slower market offtakes. Additionally, limited purchasing and poor market fundamentals in its regional markets led to its cooling prices. Furthermore, softer methanol demand results in low production costs leading the commodity to register southward trends.

Why are formic acid prices fluctuating?

1. Raw Material Costs

Changes in formic acid’s main raw ingredients such as methanol and carbon monoxide directly impact its market prices. For instance, the availability of these chemicals will lead to a surplus supply in the market, making production easier which translates to affordable prices.

On the other hand, a drop in methanol production due to weather disturbances, particularly during hurricane seasons will drive the commodity’s price fluctuation.

2. Market Demand

Demand changes from numerous industries such as chemical manufacture, textile, leather, and agriculture openly influence formic acid pricing. Generally, increased demand drives prices higher, while less demand causes prices to dip.

The commodity’s marketability flows with its top-consuming countries’ economic performance. For instance, the previous years’ pandemic, inflation, and the current war in the Middle East affected its global demand. However, the strengthening euro and dollar currencies breathe life into some businesses, reviving the commodity’s demand.

3. Technology Advances

Innovations and developments in production technology influence the efficiency of formic acid manufacturing. For instance, improved procedures can save costs. However, out-of-date technology results in higher production costs.

As a result, large-scale broiler producers implement new production facilities to streamline the process. Thus, this innovation will cause an increase in formic acid prices.

Which variables impact the price of formic acid?

• Raw Material Costs
• Market Demand
• Technological Advances
• Global Economic Conditions
• Environmental Factors
• Production Capacity

Where does formic acid come from?

Formic acid naturally occurs and functions as a crucial intermediate in chemical synthesis. Also, it is popular for its strong and sharp smell.

Additionally, it is soluble in various organic solvents and shows high reactivity.

One common technique for producing formic acid is the catalytic hydrogenation of carbon dioxide, which is a chemical synthesis process. Here is an overview of the process:

1. Sourcing of Carbon Dioxide – Carbon dioxide is acquired from numerous industrial processes such as synthesis gas obtained from natural gas or other hydrocarbons.

2. Hydrogenation Reaction – Transition metals such as cobalt or ruthenium act as a catalyst between the carbon dioxide and hydrogen gas reaction.

3. Reaction Conditions – Formic acid is primarily produced from carbon dioxide by conducting the reaction under specific temperature and pressure conditions.

4. Separation and Purification – Following the reaction, the mixture includes formic acid along with unreacted gasses, water, and additional by-products. Next, the formic acid is isolated and purified using distillation or other separation methods.

5. Refining – After purification, the separated mixture is used to extract the formic acid.

6. Final Product – The result is a high-purity formic acid suitable for diverse industrial applications.

What are the uses of formic acid?

Formic acid inhibits the growth of harmful bacteria in feed through acidification, promoting better digestion of the feed. Additionally, it acts as a reducing agent for sodium and potassium dichromate.

Furthermore, vitamin B is produced using formic acid as a pharmaceutical intermediary and it is used in a variety of industrial and chemical operations.

Some common uses of formic acid include:

Production of pesticides – Due to its toxicity to a variety of pests, formic acid is an essential ingredient in some insecticides, including ant and insect baits.

1. Leather Tanning – The leather tanning industry uses this commodity as a pH adjuster and tanning agent as it helps soften the leather and increase its strength and durability.

2. Rubber Industry – Formic acid is used as a vulcanizing agent in the rubber sector as it improves the flexibility and strength of rubber goods.

3. Production of Preservatives – To help stop germs and microorganisms from growing, it is used as a preservative in animal feed and meals.

4. Production of Dyes – Formic acid is used as a starting material in the production of some dyes and pigments.

What is the future price of formic acid?

The market for formic acid has experienced significant growth due to its increasing use in the production of animal feeds and silage additives. This growth is particularly pronounced in countries like India and China, where rising populations contribute to the growing consumption of poultry.

The ban on antibiotics in livestock feed bolsters the commodity’s demand as an alternative. Also, the emerging need for natural rubber (which utilizes formic acid in its production production process) adds to its market expansion. On the other side, the fuel cell industry uses formic acid as a carbon source to reduce its dependence on fossil fuels.

Furthermore, the global demand for animal protein is a key factor driving the expansion of the formic acid market. Thus, the price of formic acid will be $0.96 per kilogram in 2028 and its global market is expected to expand at a CAGR of 1.98% during the forecast period, reaching $1071.8 million by 2028.