1、 Market Trend Overview
| Melamine |
This week, the melamine market showed the characteristics of high price stability and gradually slowing down transactions. According to data from Shengyi Society, the benchmark price of melamine reached 9450.00 yuan/ton on April 2nd, an increase of 0.27% from the beginning of this month, continuing the strong upward trend in the previous period and entering a stage of stabilization. From the price curve, the price of melamine began a rapid upward trend in mid to late March, with a significant increase in just one month. Although it remained high in early April, there were signs of marginal weakness in the transaction end, and downstream resistance to high priced goods gradually emerged.
From the perspective of the commodity market analysis system of Shengyi Society, the current positions of melamine on the 10th, 20th, and 30th are all marked as high, and the moving average system shows a bullish trend with a clear short-term upward trend, but the characteristics of high volatility are highlighted. At the same time, the price on that day has doubled compared to the low point of 5375.00 yuan/ton this year, and the price is in the historical high range. The upward momentum is gradually shifting from “unilateral rise” to “high-level game”.
2、 Slow down driving factors
Demand side:
The current price of melamine has exceeded the 9000 yuan/ton mark, far exceeding the cost tolerance threshold of downstream industries such as sheet metal and coatings. As prices continue to rise, the pace of downstream enterprises replenishing inventory has significantly slowed down, shifting from “chasing price increases and stocking up” to “sporadic purchases on demand”. The scale of new orders has shrunk, and market wait-and-see sentiment has intensified, which is the core reason for the slowdown in transactions this week.
Supply side:
In the early stage, the operating rate of the melamine industry remained low, coupled with factors such as equipment maintenance and environmental inspections, the market supply was tight, and manufacturers had a strong willingness to sell at high prices. However, as prices continue to rise, some production enterprises are gradually resuming operations, and pending orders are gradually being delivered, resulting in an increase in spot circulation and a marginal weakening of the supply side’s support for prices.
Cost side:
Although the price of urea, the core raw material of melamine, remains high, the increase this week has narrowed, and the fluctuation of international LNG prices has stabilized. Although the cost transmission chain of “methanol → urea → melamine” is supported, it no longer shows the strong upward trend in the previous period. The cost side’s driving force for melamine has shifted from “strong pull” to “weak support”.
3、 Price trend prediction (based on the Business Society commodity market analysis system)
Based on the current market supply and demand, cost, and transaction situation, predict the subsequent price trend of melamine in three stages:
Short term (1-2 weeks): High volatility, slight rise or stability maintenance
In the short term, there has been no significant easing of geopolitical conflicts, the tight global fertilizer supply pattern has not reversed, and the support on the raw material side is still present; At the same time, production enterprises still have stock of pending orders, and their willingness to raise prices has not completely subsided. It is expected that the price of melamine will fluctuate at a high level in the range of 9400-9800 yuan/ton, and it is not ruled out that there may be a slight upward trend, but it is difficult for there to be a significant increase in trading volume, and the magnitude of the increase is limited.
Mid term (within one month): The risk of high-level decline intensifies, and prices gradually decline
If downstream resistance to high prices continues to ferment and transactions shrink further, coupled with some companies resuming production and increasing supply, the supply-demand contradiction will gradually ease. Meanwhile, if the geopolitical situation eases and international urea and LNG prices fall, the logic of cost support will weaken. At that time, the price of melamine may experience a pullback, with an expected range of 8500-9000 yuan/ton, and the high premium will gradually be absorbed.
Long term (1-3 months): Return to fundamentals, range oscillation operation
In the long run, the pattern of overcapacity in melamine production has not fundamentally changed, and domestic demand is mainly driven by rigid demand. Although exports have increased, it is difficult to make up for the domestic demand gap. The cost side will return to rationality, and the market will break away from the influence of geopolitical risk premiums and return to the fundamentals of supply and demand. It is expected that the price will fluctuate within the range of 7500-8500 yuan/ton, showing an overall trend of “high-level decline and stable operation”.
In summary, it is necessary to focus on the trend of raw material urea prices, changes in the operating rate of the melamine industry, the operating rate and transaction data of downstream board industries, and the dynamic geopolitical situation in the Middle East (affecting global fertilizer supply). If the geopolitical conflict continues to escalate and raw material prices rise again, it may lead to melamine prices remaining at a high level beyond expectations; If downstream demand recovers rapidly, transactions rebound, or the pace of price correction is slowed down; If new domestic production capacity is released in a concentrated manner, the pressure of oversupply will become prominent, and the price correction may exceed expectations.
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