This week, the domestic melamine market continued its strong upward trend, and under the combined effects of cost push, supply tightening, and enterprise price hikes, the price center has significantly shifted upward. Here is a detailed analysis of this week’s market trend:
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1、 Price trend:
This week, the market price of melamine has risen more sharply than last week. According to data from Shengyi Society, the benchmark price of melamine was reported at 6625.00 yuan/ton on March 17th, an increase of 325 yuan in just five days compared to 6300.00 yuan/ton on Monday (March 10th), with a weekly increase of 5.16%. Compared with the 5970.00 yuan/ton at the beginning of this month (March 1st), the cumulative increase is 655 yuan, and the overall increase has expanded to 10.97%. This price level has also broken the recent market high.
From daily data, the price showed a continuous upward trend this week. On March 10th, it was reported at 6300.00 yuan/ton, and then quickly broke through the range of 6337 yuan to 6446 yuan between the 11th and 13th. Over the weekend, it accelerated to above 6550 yuan and reached a high of 6625 yuan today. The steep upward trend of prices clearly reflects the current strong market pattern.
2、 Cost, supply, and demand resonance
1. Cost side: The significant increase in upstream raw material prices this week is the most core driving force behind the rise in melamine prices. The recent geopolitical events in the Strait of Hormuz have hindered the import of methanol, a key raw material. Domestic methanol prices have risen by over 7% in a single day, directly pushing up the production cost of urea. As a direct raw material for melamine, the upward pressure on the price of urea is clearly transmitted along the “methanol → urea → melamine” industry chain. At the same time, the drastic fluctuations in international crude oil prices have provided strong cost support and risk premium for the entire chemical industry chain.
2. Supply side: While costs are rising, the supply side has not relaxed. Although the overall operating rate of the industry has fluctuated this week, it still remains relatively low, and the frequent start and stop of equipment has led to limited spot circulation in the market. Data shows that on March 16th, the utilization rate of melamine production capacity in China was 56.99%. Although there was a slight rebound compared to the previous period, some enterprises resumed production over the weekend while others experienced equipment shutdowns. This kind of ‘one goes and the other goes’ parking and resumption of production makes it difficult for the market supply to form stable expectations, and instead exacerbates the temporary tense situation.
In this context, the sentiment of production enterprises pushing prices and even being reluctant to sell has become increasingly strong. Entering this week, major manufacturers are still intensively raising prices
3. Demand side: The downstream sheet metal and molded plastic industries have fully resumed work after the holiday, forming a rigid demand support. A large number of construction sites across the country have started construction, driving the demand for building templates and playing a fundamental role in driving the demand for melamine. Although demand is not the main engine in this round of price increases, it provides a foundation for sustained price increases, allowing cost pressures to be smoothly transmitted downstream.
3、 Future prospects
Looking ahead to next week, it is expected that the melamine market will maintain a high and firm trend. On the supply side, companies generally have no inventory pressure, and some devices are still in a shutdown state, making it difficult for manufacturers to reduce their willingness to raise prices in the short term. On the cost side, the raw material urea market is expected to remain strong under the support of spring plowing demand, which will continue to provide bottom support for melamine.
However, market risks are also accumulating. As prices continue to rise, downstream companies’ willingness to chase after high prices may weaken, and their ability to accept high priced raw materials remains to be observed. There may be room for negotiation in some high priced transactions. It is recommended that market participants closely monitor the trend of raw material prices, the progress of restarting production facilities, and the actual order situation followed up by downstream.
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