Lack of demand, weak melamine market

This week, the melamine market weakened again, with most companies’ quotes falling by 50-100 yuan/ton or actual transaction space increasing today. On June 5th, the benchmark price of melamine in Shengyi Society was 5937.50 yuan/ton, a decrease of -0.21% compared to the beginning of this month (5950.00 yuan/ton). Some companies have low-end prices. The main reasons for the decline in the melamine market are supply, demand, and raw material costs.
Supply side:

After a low operation in mid to late April, the utilization rate of melamine production capacity climbed to a high level in mid May with the restart of the plant. Although some companies stopped for maintenance in late May, resulting in a decrease in operating rates, the market’s spot supply is still significantly higher than the previous level. Supply continued to be loose until early June, intensifying sales pressure on manufacturers and leading to an accumulation of inventory.
In terms of demand:
The domestic terminal market has been deeply mired in weakness this year, and as of mid year, signs of downstream recovery remain weak. According to relevant statistics, the scale of downstream industry orders has significantly shrunk, reaching only 20% -35% of the same period last year, and companies generally adopt a cautious strategy of producing according to orders. The weakness on the demand side is transmitted to the upstream, which limits the procurement of melamine to meeting rigid demand and lacks a strong driving force on the overall market.
In terms of cost:
The urea market continues to consolidate, with factories tentatively raising prices after delivering low-priced orders. However, there is weak follow-up on new orders, and the market trading heat has cooled down. The current supply is sufficient (daily output of 205600 tons, operating rate of 87.23%), while the demand side has benefited from the summer fertilizer cycle, with a marginal improvement in the supply of compound fertilizers, but overall support is limited. The market has doubts about the sustainability of demand and a strong wait-and-see attitude. As of June 5th, the benchmark price of urea in Shengyi Society was 1898.00 yuan/ton, an increase of 0.32% compared to the beginning of this month (1892.00 yuan/ton).
In summary, the current melamine market is full of negative factors: weak terminal demand is suppressing supply-demand balance, expectations for raw materials are weakening, and coupled with a generally bearish attitude among industry players, prices are likely to further bottom out.