1、 Market Review
| Gamma-PGA (gamma polyglutamic acid) |
This week, the melamine market as a whole showed a trend of “high-level decline and narrow consolidation”. As of May 8th, the benchmark price of melamine in Shengyi Society was 6850.00 yuan/ton, a decrease of 0.36% compared to the beginning of this month (6875.00 yuan/ton), and it is basically in a sideways consolidation stage.
From the price trend in the past three months, the market has experienced a roller coaster like situation: in early February, the price bottomed out around 5700 yuan/ton, and then continued to rise under the push of cost, supply and demand, and market sentiment. In early April, it reached a stage high of 9675 yuan/ton, with an increase of over 70%; But since mid April, the price has rapidly fallen, and as of May 8th, it has dropped to 6850 yuan/ton, with a drop of more than 29% from the high point. Currently, the price is in the mid to low range of the past year, slightly higher than the low point of 5375 yuan/ton this year, and there is still a price difference of nearly 3000 yuan/ton from the high point this year.
2、 Interpretation of core technology signals
According to the analysis logic of the moving average of Business Society’s spot trading platform, the moving average indicator of the melamine market this week has sent a clear adjustment signal:
The 10 day moving average continues to operate below the 20 day moving average, and the moving average shows a negative expansion trend, corresponding to the market’s accelerated decline stage. On May 6th, a signal of “1/07 bottoming out” appeared, confirming the continuation of the short-term downward trend. Prices have always been under pressure below various moving averages, and the rebound is weak.
From the perspective of moving averages, the 20 day, 30 day, and 60 day moving averages still show a clear bearish trend, indicating a lack of short-term upward momentum in prices and a weak pattern that has not yet been reversed.
From the perspective of cycle position, the current price is at a low level in both the 10/20/30/60 day cycle, and at a medium low level in the 90 day and one-year cycles, indicating that the short-term price has entered a temporary bottom range and the downward momentum has weakened.
3、 Fundamental core influencing factors
Cost side: The core raw material of melamine is urea. Recently, the overall urea market has been weak, and prices have been under pressure to decline. As of May 8th, the benchmark price of urea in Shengyi Society was 1867.50 yuan/ton, a decrease of 0.4% compared to the beginning of this month (1875.00 yuan/ton). Directly weakened the cost support of melamine.
Supply side: The high prices in the early stage stimulated the increase in industry operating rates, and some shutdown and maintenance facilities were gradually restarted. The market supply of goods increased, especially in the East China region where there was sufficient circulation of goods, and the pressure on enterprises to ship increased.
On the demand side, downstream industries such as sheet metal and coatings have entered the traditional off-season, with low terminal operating rates and insufficient willingness to purchase for essential needs. The market lacks centralized stocking demand and has a low acceptance of high priced sources, resulting in a weak overall trading atmosphere.
After experiencing significant fluctuations in the early stages, market participants tend to be cautious. Traders mainly rely on shipping to recoup funds and are unwilling to actively receive and stockpile goods; Downstream enterprises have a strong wait-and-see attitude, waiting for prices to further fall. The overall market presents a mentality of “buying up, not buying down”, further exacerbating the weak operation of prices.
4、 Market price forecast and trend outlook
Judgment on the price trend of melamine market in the next 1-2 weeks:
Price range prediction: It is expected that the price will fluctuate within the range of 6700-7000 yuan/ton, with the core support level around 6700 yuan/ton and the pressure level at 7000 yuan/ton.
The short-term downward momentum has weakened to some extent, but the bearish pattern of the moving average has not yet reversed. Coupled with the impact of the off-season demand, it is difficult for prices to rebound significantly, and it is highly likely to maintain weak consolidation. The possibility of a slight bottoming out cannot be ruled out. If the price falls below 6700 yuan/ton, the downward support will look towards the 6500 yuan/ton line.
Overall, the current melamine market is in a weak consolidation stage after a decline, lacking clear upward drivers in the short term, and the weak pattern is difficult to quickly reverse. In the future, it is necessary to focus on the price of raw material urea, changes in downstream demand, and adjustments in industry operating rates. These factors will be the key to determining whether the market can stop falling and stabilize.
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