This week, the melamine market was affected by the geopolitical event in the Strait of Hormuz and the resonance of domestic spring farming demand, resulting in a rapid upward trend in prices, presenting a cost dominant, supply-demand tight, and high-level oscillation pattern, becoming a strong product in the chemical sector.
| Melamine |
1、 Market performance
As of March 4th, the benchmark price of melamine in Shengyi Society was 6150 yuan/ton, with a weekly increase of 3.02% and a cumulative increase of 4.05% in the past 5 days. The price has hit the high range of the year. Domestic mainstream factories have raised their quotations by 50-350 yuan/ton, resulting in tight spot circulation and sufficient orders from manufacturers. The focus of transactions has steadily shifted upwards, and downstream industries such as sheet metal and adhesives are following up as needed, with strong ability to handle urgent needs.
2、 Core driver
The passage through the Strait of Hormuz is blocked, Iran’s methanol exports are restricted, and 60% of China’s imported methanol relies on Middle Eastern sources. The daily increase in methanol spot prices exceeds 7%, directly pushing up the production cost of urea; Urea, as the core raw material of melamine, has been raised to 1800-1870 yuan/ton in the main production areas, forming a cost transmission chain of methanol → urea → melamine, providing strong support for the price of triamine. At the same time, the increase in crude oil and shipping costs further raises the cost center of the entire chemical industry chain.
Supply and demand fundamentals support
1. Supply side: The industry’s operating rate remains at 55% -60%. After the Spring Festival, some equipment maintenance has not been fully restored, and the pace of new capacity release is relatively slow. The market’s spot supply is limited, and manufacturers’ reluctance to sell is heating up.
2. Demand side: After the holiday, the sheet metal and molding plastic industries have fully resumed work, and spring plowing and fertilizer preparation have driven the peak season of urea demand. Downstream demand for replenishment has been released, and the market is supported by basic needs, with no obvious pressure to accumulate inventory.
Dual support of cost and emotion
The support for the peak season of urea spring plowing has not subsided, coupled with the geographical premium of methanol, the cost side of melamine continues to strengthen; The market has a strong bullish sentiment, and traders are moderately stocking up, further boosting prices and forming a positive cycle of “cost increase → quotation increase → transaction follow-up”.
3、 Market risk
The upward trend in the market is still subject to multiple constraints: the overcapacity pattern of melamine in China has not changed, and the resumption of production and the introduction of new production capacity in the future will suppress the increase; The downstream demand for sheet metal is moderately recovering, and high prices may trigger resistance; If the Strait of Hormuz resumes operations, the decline in methanol will weaken cost support; At the same time, urea is subject to supply guarantee and price limit constraints, which indirectly limits the upward potential of triamine.
4、 Trend prediction
Short term (mid March): Strong fluctuations at high levels, with a price range of 6100-6400 yuan/ton. The geopolitical premium has not dissipated, supported by urea spring plowing and tight supply, and the upward trend continues but narrows.
Mid term (late March to April): gradually peaking and falling back. The demand for spring plowing has receded, urea has weakened, coupled with a rebound in supply, cost support has weakened, prices have returned to fundamentals, and the fluctuation range has moved down to 5800-6100 yuan/ton.
| http://www.lubonchem.com/ |