1、 Market Review
This week, melamine has emerged from an extreme market trend of “sharp decline followed by sideways trend”. The benchmark price of Shengyi Society fell from 8050 yuan/ton at the beginning of the week to 7025 yuan/ton over the weekend, with a cumulative decline of 12.73% for the whole week, almost wiping out most of the previous gains and becoming the week with the most severe decline since this round of rise.
Core driving factors for decline
1. In the early stage of price surge on the supply and demand side, the market is overly optimistic about the peak season demand for downstream boards and coatings. However, terminal demand has not shown any improvement this week, and downstream enterprises only maintain essential procurement, resulting in a complete collapse of their willingness to accept high priced orders; At the same time, the equipment that was shut down for maintenance in the early stage resumed production, and the market supply quickly rebounded. The supply-demand contradiction shifted from tight balance to loose, and prices lost their upward support.
At the beginning of the week, a sharp drop of nearly 10% in a single day broke the market’s bullish expectations, and pessimism quickly spread. Some traders chose to clear inventory at low prices to avoid risks, exacerbating the downward pressure on the market.
Trend prediction
Based on this week’s technical signals and market fundamentals, the following are the predictions for next week’s trend:
Short term (1-2 weeks): Due to the “negative expansion” stage of the mean, the momentum of inertia decline still exists. There is a strong pessimistic sentiment in the market, and downstream buyers are mostly adopting a wait-and-see attitude. It is expected that the price will repeatedly compete around the 7450 yuan/ton line. If the support is weak, there is still a risk of further exploring the 7000 yuan integer level.
Mid term (1 month): Pay attention to when the 10 day moving average will level. Only when the price stops falling and stabilizes, and the moving average shifts from “negative expansion” to “negative contraction”, is it a signal of slowing down the decline and market bottoming out.
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