The melamine market continues to be weak due to weak supply and demand

Business Society: Supply and demand are weak, melamine market continues to be weak

This week, the melamine market did indeed continue its weak pattern, with an overall trend of weak supply and demand, and weak and stable price pressure. As of September 8th, the benchmark price of melamine in Shengyi Society was 5687.50 yuan/ton, an increase of 0.44% compared to the beginning of this month (5662.50 yuan/ton).
The current melamine market mainly presents the following characteristics:
Overall weak consolidation of prices: As can be seen from the table, although some companies have raised their quotations, the domestic average price still fell by 0.54% month on month. The mainstream prices are generally low, with factory quotes in the East China region referring to 5130-5350 yuan/ton, and explicitly mentioning “partially negotiable”, indicating that there is room for discounts in actual transactions.
Continued weak demand: The market has a weak buying and selling atmosphere, with downstream companies mainly purchasing on demand and few new orders being transacted. This is mainly due to the sustained downturn in downstream industries such as real estate, which has led to flat demand in major consumer sectors such as artificial boards.
The industry’s operating rate remains relatively high, and enterprise inventory is under pressure: although the capacity utilization rate on September 5th decreased compared to the previous day (57.92%), overall the capacity utilization rate still fluctuates at a high level of around 58%. Under the combined effect of high operating rates and sluggish demand, some enterprises are facing pressure from inventory accumulation.
Poor production profit: Industry data shows that the production profit margin is already negative (-1.38%), and expectations continue to decline. This indicates that many companies are in a loss making state at the current price level.
The price of raw material urea has decreased: The upstream raw material urea price has slightly decreased. As of September 8th, the benchmark price of urea in Shengyi Society was 1703.75 yuan/ton, a decrease of 0.51% compared to the beginning of this month (1712.50 yuan/ton). The weakening of support for the cost of melamine has also dragged down market sentiment from the cost side.
In the short term, the positive factors for the melamine market are limited, and it is expected that the market will continue to fluctuate weakly. The core contradiction in the market lies in the imbalance between high supply levels and weak downstream demand. If there is no significant improvement on the demand side, it cannot be ruled out that prices may continue to decline slightly. We need to pay attention to whether downstream construction after the end of autumn can bring about a rebound in demand.