This week, the domestic melamine market continued its weak trend, with a downward shift in price focus and a light trading atmosphere. As of July 21st, the benchmark price of melamine in Shengyi Society was 5837.50 yuan/ton, a decrease of 0.85% compared to the beginning of this month (5887.50 yuan/ton). Compared with the high of 6875 yuan/ton in the same period last year, it has dropped significantly by 19.6% year-on-year, with a price difference of 1038 yuan/ton, reflecting a clear loose supply and demand pattern in the current market.
| Melamine |
Raw material end:
From the upstream of the industrial chain, the raw material urea market has continued to weaken this week, although there has been a slight rebound recently due to local device maintenance. As of July 21, the benchmark price of urea in Shengyi Society was 1830.00 yuan/ton, a decrease of 0.46% compared to last week (1838.00 yuan/ton). The sustained low operation of raw material prices has significantly weakened the cost support for melamine production. According to estimates, the current production cost of melamine has decreased by about 15% compared to the beginning of the year, and the price drop of the product is even greater, resulting in a continuous compression of the industry’s profit margin. Some small and medium-sized enterprises have approached the breakeven line.
Supply and demand side:
From the perspective of supply and demand pattern, the current melamine market presents a dual weak characteristic of “weak supply and weak demand”. In terms of supply, the industry’s average operating rate remained at a low level of 56.73%, a decrease of 4.15 percentage points from the same period last year. However, social inventory remains high and the speed of destocking has significantly slowed down. The demand side continues to be weak, and dealers generally adopt a wait-and-see attitude, resulting in a low willingness to purchase. Affected by the deep adjustment of the real estate industry, the order volume of downstream panel enterprises has significantly shrunk, only 20% -35% of the same period last year. The operating rate of enterprises continues to operate at a low level, and the procurement of melamine is strictly controlled within the necessary amount.
Under the pressure of market supply-demand imbalance, some atmospheric pressure units have actively reduced their production load, and some enterprises have chosen to shut down for maintenance to alleviate inventory pressure. The performance in import and export is flat, with a cumulative export of 320000 tons from January to June, a slight increase of only 0.32% year-on-year. It is expected that the annual export volume will be in the range of 400000 to 550000 tons, making it difficult to effectively digest domestic excess capacity.
The current melamine market is facing dual pressures of insufficient cost support and weak demand follow-up. On the one hand, the prices of raw materials such as urea continue to fluctuate at a low level; On the other hand, downstream industries such as sheet metal and coatings have entered the traditional off-season, with low purchasing enthusiasm. In addition, the lack of significant improvement in export orders has led to the gradual accumulation of market inventory pressure. It is expected that without significant positive stimuli in the short term, the price of melamine may continue to maintain a weak and volatile pattern.
Looking ahead to the future, under the dual pressure of expected resumption of production and seasonal demand off-season, the market is unlikely to show signs of recovery in the short term. It is expected that some factories in the northern region may lower their prices by 50-100 yuan/ton, while in Xinjiang, due to major equipment repairs, local prices may receive temporary support.
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