The short-term market for melamine is weakening

1、 Price trend: Over 10% decline within the month, fluctuating at a low level

This week, the melamine market continued its downward trend since mid April. On May 27th, the benchmark price has fallen to 6137.50 yuan/ton, a slight drop of 0.20% per day. Compared with the 6875.00 yuan/ton at the beginning of this month, the monthly decline reached 10.73%. At present, the price has fallen back to a relatively low range in the past year, and the market’s trading center continues to shift downwards.
Market fundamentals:
On the cost side: The price of urea, the main raw material for melamine, has been weak recently. Although some urea companies have attempted to raise their prices, the overall index of the industry chain remains low and has not formed effective support. The decrease in raw material costs directly weakened the price bottom of melamine, providing room for manufacturers to lower prices.
Supply side: Although some devices in the industry have entered a maintenance period, the supply pressure has eased to some extent, but this has not reversed the downward trend. The reason is that the supply reduction caused by maintenance is offset by the dual negative effects of cost reduction and weak demand. The market has shifted from a “cost driven upward trend” to a “cost collapsing downward trend”, and the maintenance benefits seem like a drop in the bucket.
On the demand side: downstream industries such as sheet metal and melamine powder have not seen any improvement in demand, and procurement remains in high demand, with strong resistance to high priced raw materials. Under the mentality of ‘buying up, not buying down’, the downstream wait-and-see atmosphere is strong, further suppressing the possibility of price rebound.
4、 Future outlook:
Overall, the melamine market is currently under dual pressure of “cost collapse and weak demand”. Although there are maintenance benefits on the supply side, it is difficult to withstand the impact of cost decline. Technical indicators show that the downward momentum is still present, and it is expected that the market will continue to weakly bottom out in the short term. The future market needs to focus on the trend of urea prices and whether downstream demand can recover under the stimulation of low prices.