This week, the trading atmosphere in the melamine market has rebounded, and the overall market has shown a narrow adjustment and stable operation trend. Data shows that as of November 4th, the benchmark price of melamine was 6075.00 yuan/ton, a decrease of 0.21% compared to the beginning of this month (6087.50 yuan/ton).
Cost analysis: Unstable cost support for urea
As the main upstream raw material of melamine, the market changes of urea directly affect the cost support of melamine.
Urea price fluctuations: Recently, the urea market has been mixed with long and short positions, and the supply and demand pattern remains loose. Although the urea benchmark price slightly increased to 1760.00 yuan/ton on November 4th (up 0.86% from the beginning of the month), this was mainly due to short-term disturbances in news such as India’s bidding expectations and weak storage sentiment.
Weak cost support: Overall, urea itself is facing high inventory pressure from enterprises and the test of agricultural demand off-season, and the price increase lacks sustained momentum. Therefore, the cost support of urea for melamine is relatively limited, and it has not had a strong upward effect on the price of melamine.
Supply side analysis: Capacity release brings pressure
Entering November, the supply side of the melamine market is facing pressure to release production capacity.
The operating rate has rebounded: With the gradual resumption of production of some parking and maintenance facilities in the early stage, the operating rate of the melamine industry has significantly increased, and has now risen to a high of around 72%.
Supply increment is evident: The resumption of production has brought significant supply increment. In addition, there are still new production capacity waiting to be released domestically, and in the long run, the situation of loose supply of melamine has not fundamentally changed. The high operating rate and sufficient supply of goods have significantly suppressed the current market prices.
Demand side analysis: Limited terminal support for essential needs
Currently, it is the traditional off-season for melamine demand, and downstream demand is generally flat.
Downstream essential procurement: Due to the downturn in the terminal real estate industry, the main application areas of melamine, such as impregnated paper, decorative panels, coatings, etc., are experiencing insufficient production. Downstream factories generally adopt the strategy of “immediate use, immediate procurement” and rarely engage in centralized inventory replenishment.
Export is difficult to become the main engine: Although exports have alleviated some inventory pressure to a certain extent, they exhibit a “pulse like” characteristic and lack sustainability due to policy and international market price fluctuations. Overall, the weak demand side is the core factor restricting the rise in melamine prices.
Outlook for the coming period
Overall, the current melamine market is in a pattern of “loose supply, flat demand, and unstable costs”. Although downstream bargain hunting provides some support for prices, the high operating rate on the supply side and the sustained downturn on the demand side have resulted in a lack of clear upward driving force in the market. It is expected that in the short term, the price of melamine will continue to remain stable, maintaining a narrow range of fluctuations and consolidation trend. It is necessary to closely monitor the implementation of downstream winter storage policies and whether there are new equipment maintenance plans, which may have a marginal impact on the market supply and demand balance.
| http://www.lubonchem.com/ |