Comparative Analysis of Formic Acid and Acetic Acid Markets: Supply-Demand, Cost, Downstream Applications and Development Trends

Formic acid and acetic acid, as fundamental organic acids, are key raw materials in the chemical industry chain. Both markets exhibit the characteristics of "divided supply and demand patterns, dual drivers of cost and demand, and accelerated transformation towards high-end and green development", but they differ significantly in terms of capacity structure, downstream applications, and price driving logic. This article conducts a deep analysis of the current market status of the two categories from the dimensions of supply and demand, cost, downstream demand, and market trends.

Ⅰ.Formic Acid Market: Tight Supply-Demand Balance, Driven by High-End and export Growth

(1) Supply Side: Concentrated Capacity, Short-Term Contraction, Long-Term Green Transformation

1. Highly Concentrated Capacity: The domestic formic acid industry shows the characteristics of "strong in the east and weak in the west, and concentrated along the river", with the eastern region as the core production area, accounting for over 60% of the capacity. The top five enterprises collectively hold more than 72% of the capacity. Leading enterprises dominate the market with clean production processes (methanol formate hydrolysis and CO carbonylation), resulting in high industry concentration and strong bargaining power.
2. Short-Term Supply Continues to Contract: Since March 2026, the domestic formic acid market has witnessed a clear tightening of the supply side. Large-scale facilities in major production areas such as Shandong have undergone concentrated maintenance, coupled with the temporary shutdown of some enterprises, leading to a decline in industry operating rates and a reduction in effective supply. Inventories have been continuously depleted, and a tight supply-demand balance has officially formed. Internationally, the Middle East's geopolitical conflicts have pushed up energy costs, and European leading enterprises have raised formic acid prices, further shifting the global supply center upward and supporting the expectation of a tight domestic supply side.
3. Long-Term Capacity Upgrading towards Green: Expansion of traditional process capacity has slowed down, while the commercialization of green technologies such as CO₂ hydrogenation to formic acid has accelerated. Demonstration facilities with a capacity of over 10,000 tons have achieved continuous operation, with unit energy consumption reduced by 18% compared to traditional processes. Future capacity will gradually shift towards low energy consumption and low carbon emissions, and the proportion of high-purity formic acid (purity ≥ 99%) is expected to increase to 30% by 2026.

(2) Demand Side: Stable Traditional Demand, Explosive Growth in Emerging Fields, Export as an Important Increment

1. Stable Demand in Traditional Fields: Feed additives are the largest consumption field for formic acid, accounting for nearly 40%. As a feed preservative, it can effectively inhibit bacterial growth. Benefiting from the stable development of the global livestock industry, demand maintains a rigid growth. In addition, demand in traditional fields such as leather tanning, textile dyeing, and pesticide synthesis remains stable, providing a basic support for the market.
2. Emerging Fields as Growth Engines: Demand in high-end scenarios such as lithium battery recycling metal extraction, hydrogen storage and transportation (liquid organic hydrogen carrier LOHC), and electronic-grade cleaning has exploded. In 2025, the consumption of formic acid in the lithium battery recycling field increased by 57% year-on-year, and the demand for electronic-grade formic acid grew at an average annual rate of over 8%, driving the product towards high purity and refinement.
3. Continuous Release of Export Demand: China is a major exporter of formic acid globally, with emerging markets such as Southeast Asia and India highly dependent on Chinese formic acid. Since March 2026, the increase in overseas prices has driven up expectations for domestic exports, further amplifying the domestic supply-demand gap and becoming the core increment of the market.

(3) Market Trends: Price Center Rises, Industry Transforms towards "Technology-Driven"

In the short term, the combination of supply contraction, export, and growth in emerging demand will continue the tight supply-demand balance in the formic acid market, with the price center steadily rising. In the long term, the industry will shift from "scale-driven" to "technology-driven", with green processes and high-purity products becoming mainstream. Leading enterprises will further consolidate their market positions with technological and cost advantages, while small and medium-sized capacities will gradually be phased out, and global market share will concentrate in China.

Ⅱ.Acetic Acid Market: Structural Overcapacity, Driven by Cost and Emerging Demand

(1) Supply Side: Coexistence of Capacity Expansion and Structural Clearing, Low Operating Rates

1. Coexistence of Capacity Expansion and Structural Clearing: The domestic acetic acid industry is characterized by overcapacity, with a large number of small and medium-sized enterprises. However, the industry is undergoing structural clearing, with the operating rates of small and medium-sized enterprises remaining low. Leading enterprises are expanding capacity through technological upgrades and cost reduction, while small and medium-sized enterprises are gradually being phased out. The industry is moving towards a more concentrated and efficient capacity structure. 1. Abundant total capacity but prominent structural contradictions: By the end of 2025, China's total acetic acid capacity reached 16.65 million tons, and there will still be 3.5 million tons of new capacity released in 2026-2027. Although it seems to be overcapacity, the feature of "coal-based dominance and oil-based collapse" is obvious. Under high oil prices, the cash cost of acetic acid produced from naphtha is far above the market level, and oil-based facilities are either shut down for a long time or operate at reduced capacity, resulting in effective capacity being lower than nominal capacity.
2. Low operating rate maintained, inventory reduction going well: Since the beginning of 2026, multiple acetic acid facilities have undergone concentrated maintenance, and new facilities have restarted at low loads. The industry's average operating rate has remained at a relatively low level of 74% to 80%, reducing the amount of available spot goods. The inventories of major enterprises have dropped to a low level, with no pressure to reduce inventory, and they have a strong willingness to hold prices.
3. Strong support from the cost side: Methanol is the core raw material for acetic acid production. In March 2026, the methanol facilities in the Middle East were shut down, tightening global methanol supply and causing a significant increase in costs, providing strong support for acetic acid prices.

(2)Demand side: Weak traditional demand, high prosperity in emerging fields, and exports as the main driver for digestion

1. Weak growth in traditional fields: The growth of traditional downstream demands such as PTA and acetic acid esters has slowed down. The single consumption of PTA has decreased, and the consumption of acetic acid esters has been restricted due to the downturn in the real estate market. The traditional fields' pull on acetic acid demand has weakened. However, the cost of acetic acid in the PTA field is extremely low, and the downstream is less sensitive to prices, resulting in less resistance to price transmission.
2. Explosive demand in emerging fields: The photovoltaic film (EVA) has driven the rapid growth of acetic acid vinyl (VAM) demand. Electronic-grade acetic acid is used in semiconductor cleaning and lithium battery additives, with a compound annual growth rate of over 28% in demand over the past three years. The consumption proportion of emerging fields has increased from 10.8% in 2023 to over 15% in 2026, becoming the core driving force for demand.
3. Rigid export demand: India is the largest export destination for China's acetic acid, accounting for 70% of the export volume. Its domestic capacity is insufficient, and new facilities will not be put into operation until 2028. From 2026 to 2028, India's rigid import demand will continue to digest China's excess capacity, becoming an important support for the market.

(3)Market trend: Short-term price fluctuation and upward movement, long-term acceleration of capacity clearance

In the short term, the cost support, supply contraction, and the combination of emerging and export demands will cause acetic acid prices to fluctuate and rise. In the long term, the structural overcapacity in the industry will drive the clearance of inefficient capacity, increase the proportion of low-cost coal-based capacity, and enhance industrial concentration. At the same time, the continuous growth of high-end demands in electronics, photovoltaics, etc., will drive acetic acid towards high value-added and green development, gradually restoring the industry's profit level.

Ⅲ.Comparison of formic acid and acetic acid markets and core influencing factors

(I) Core market differences

Comparison dimension Formic acid market Acetic acid market

Supply and demand pattern Short-term tight balance, long-term green capacity upgrade Structural overcapacity, insufficient effective capacity, export digestion of excess capacity

Demand driver Traditional rigid demand + emerging high-end demand + export triple drive Weak traditional demand, emerging fields + export dominance

Capacity structure High concentration, dominated by leading enterprises Total overcapacity, cost differentiation between coal-based and oil-based

Price logic Direct drive by supply contraction and demand growth Cost support and marginal improvement in supply and demand drive

(II) Common core influencing factors

1. Cost side: Fluctuations in energy prices and raw material prices such as methanol directly affect the production costs of the two categories, which is the core underlying logic of price fluctuations.
2. Policy side: The tightening of environmental protection and carbon reduction policies promotes the industry's transition to green and low-carbon, accelerates the clearance of backward capacity, and benefits leading clean production enterprises. 3. Emerging Demands: The explosive growth in demands from new energy sectors such as lithium batteries, photovoltaics, and electronics, as well as high-end manufacturing, provides long-term growth space for the two organic acids and promotes the high-end upgrading of products.
3. International Market: Geopolitical factors, changes in overseas production capacity, and fluctuations in export demands all affect the domestic supply and demand balance, becoming important external variables for price fluctuations.

Ⅳ.Future Market Outlook

(1) Formic Acid Market

Short-term (1-6 months): With continuous supply maintenance, strong export and emerging demands, the tight supply and demand balance will continue, and the price center will steadily rise. Long-term (1-3 years): The capacity of green processes will gradually be released, the proportion of high-end products will increase, the industry concentration will further improve, and the global market share will be concentrated in China. The market will maintain a steady growth, with an annual compound growth rate of approximately 4%-5%.

(2) Acetic Acid Market

Short-term (1-6 months): With strong cost support, low operating rates, and favorable emerging and export demands, prices will fluctuate upward. Long-term (1-3 years): Inefficient oil-based capacity will continue to be cleared, the proportion of coal-based capacity will increase, and the industry supply and demand pattern will gradually improve. The demand in emerging fields will continue to grow rapidly, and the rigid support of exports will drive the market to transition from "excess" to "balance", and the profit level will gradually recover.

Overall, both the formic acid and acetic acid markets are in a critical period of transformation. In the short term, prices will fluctuate driven by factors such as supply and demand, costs, and exports. In the long term, they will benefit from the growth of emerging demands in new energy and high-end manufacturing, as well as the optimization of the industrial structure. The market's resilience and growth potential will be highlighted, and leading enterprises will take the lead in the industry transformation by leveraging their technological, cost, and scale advantages.