1、 Price trend: After a sideways oscillation, it stabilizes and the overall center of gravity shifts downwards
This week (July 9-15), the benchmark price of melamine showed a trend of “slight fluctuations first, then stabilizing sideways”. As of July 16, the benchmark price of melamine was 6012.50 yuan/ton, a decrease of 0.62% compared to the beginning of this month (6050.00 yuan/ton).
| Melamine |
From the perspective of cycle position, the positions of 10 day, 20 day, 30 day, 60 day, 90 day, and one-year cycles are all marked as “low”, indicating that the current price is in a price depression in the past year, with no price support advantage in both the long and short term, and the bullish atmosphere in the market is extremely weak.
2、 Dimension of spot moving averages: Long and short moving averages simultaneously decline, creating a strong bearish atmosphere in the market
The short-term 10 day moving average (red line) and the medium-term 20 day moving average (blue line) have simultaneously emerged from a continuous downward channel, and the 10 day moving average has been under long-term pressure below the 20 day moving average. The 10 day minus 20 day moving average value has been in the negative range, and the standard bearish pattern has been established:
1. Lack of inflection point signal: There has been no change in the moving average from negative to positive during this week’s cycle, and there is no bullish signal that the 10 day moving average crosses the 20 day moving average. The market has no technical basis for bullish counterattacks;
2. Obvious suppression above: Two moving averages simultaneously move downwards, forming layers of pressure bands, and spot prices always hover below the moving averages. Even if they stabilize in the short term, they are unable to break through the pressure brought by the moving averages upwards;
3. Lack of upward momentum: In recent days, market prices have remained flat without any rebound, indirectly reflecting that downstream only maintains rigid sporadic purchases, and intermediaries have a weak willingness to actively push up prices, with no incremental funds entering the market to support the market.
3、 Cost side support weakens, raw materials continue to drag down the market
The core raw material of melamine, urea, weakened synchronously. The benchmark price of urea this week was 1770 yuan/ton, a decrease of 2.41% from 1813.75 yuan/ton at the beginning of the month. The cost support of raw materials continued to loosen:
1. Urea is in the off-season of agricultural demand, with factory inventory accumulation and pressure on shipments, resulting in a continuous decline in urea prices, directly compressing the bottom of melamine costs;
2. The decline in raw materials weakens the industry’s confidence in rising prices, making it difficult for upstream melamine production companies to speculate on price increases at the cost end. Even if prices are low, there is no cost advantage driving a rebound.
4、 Interpretation of Supply and Demand Fundamentals
supply side
The industry’s production remains stable, with no significant destocking of manufacturers’ inventory, and sufficient supply of spot goods in the market; The decline in raw material urea has led to a slight decrease in production costs for some units. Enterprises have not engaged in centralized maintenance and production reduction, nor have they actively controlled quantities to maintain prices. The loose supply of goods has suppressed the room for price increases.
Demand side
The downstream industries of sheet metal and adhesives have entered the traditional high temperature off-season, with fewer terminal orders for home decoration and building materials. Downstream factories can purchase and use them as needed, and there is no centralized replenishment behavior; Traders mainly adopt a wait-and-see approach, with a low willingness to purchase and stockpile goods at low prices. Transactions maintain a small level of essential demand, and there is no incremental benefit on the demand side.
5、 Prediction of future market trends
1. Short term (next week): The technical moving average bearish trend has not changed, and the cycle position is at a low level. Coupled with weak raw material urea, melamine is likely to continue to fluctuate in a narrow range at a low level, making it difficult for prices to rebound significantly. The price range of 6010-6030 yuan/ton is mainly characterized by repeated sideways movements;
2. Mid term turning point: In order to reverse the weakness of the market, two major signals need to appear. One is that the moving average changes from negative to positive (the 10 day moving average crosses the 20 day moving average), forming a technical upward signal; Secondly, downstream sheet metal industry orders have rebounded and urea raw materials have bottomed out, resulting in a simultaneous bullish trend on both the supply and demand sides;
VI. Summary
This week, the overall stability of melamine is relatively weak, with prices falling slightly and falling into a low-level sideways trend. The technical moving average continues to be bearish, while the raw material urea weakens synchronously. Downstream demand is weak during the off-season, and the long short pattern is clearly biased towards bearish. At present, the market relies solely on rigid demand transactions to maintain circulation, lacking favorable factors that can drive price increases. The short-term market situation is difficult to change from a weak operating pattern, and it is necessary to continuously track the trend of raw material urea and the recovery of downstream plate production, waiting for the emergence of a double turning point of moving average and supply and demand.
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