The “partial push up” trend in the melamine market is the result of multiple factors such as short-term tightening of the supply side, slight cost increases, and sustained weak demand. The market has shown a high-level stalemate.
According to data from Shengyi Society, the domestic average price of melamine increased from 5530 yuan/ton (November 26) to 5600 yuan/ton (December 1) within one week after November 26, with a cumulative increase of about 1.11%. Entering early December, the upward trend has significantly slowed down, indicating that the driving force behind the rise is weakening.
| Melamine |
The local increase this time is mainly driven by changes in the supply side and costs, but there are obvious constraints on the demand side.
1. Supply side: Local tightening and enterprise price hikes
The overall capacity utilization rate of the industry slightly decreased from 62.20% to 60.80% at the end of November, with a slight contraction in supply. Some production enterprises have sufficient pending orders and low inventory, which constitutes their core confidence in raising prices and continuing to push up quotes.
Cost side: Raw material urea prices rise
On December 2nd, the benchmark price of urea in Shengyi Society was 1702.50 yuan/ton, an increase of 2.71% compared to the beginning of this month (1657.50 yuan/ton). This has formed a rigid cost support for the price of melamine.
3. Demand side: Continued weakness, resistance to high prices
The main industries such as downstream artificial boards have not seen a fundamental improvement in demand due to the impact of real estate. With the rise in prices, downstream resistance to high priced goods is becoming increasingly apparent, leading to a decrease in new orders for production enterprises, which is the fundamental reason why price increases are unsustainable.
In summary, the ‘partial price increase’ this time is not driven by demand recovery, but by short-term factors on the supply side, and its sustainability is weak. The future direction of the market will depend on downstream acceptance of current prices and further changes in upstream enterprise operating rates.
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