Price trend

Last week, the domestic melamine market stabilized and maintained a stalemate. As of July 28, the benchmark price of melamine from SunSirs was 5,825.00 RMB/ton, down 1.06% from the beginning of this month (5,887.50 RMB/ton).

Analysis review

The domestic melamine market has recently shown signs of weakness and consolidation, with multiple factors contributing to the price war. From a supply and demand perspective, upstream manufacturers have proactively lowered their prices (lower-end prices have fallen to 5,200-5,400 RMB/ton) to stimulate market transactions. Combined with a phased influx of international orders, these companies have effectively reduced inventory levels, prompting some low-priced supplies to gradually return to a reasonable range.

Falling urea raw material prices have weakened cost support, while shortened order cycles for manufacturers have combined to suppress upward potential for melamine prices. Downstream demand was cautious, and processing companies, facing ample inventory from previous low-price production and low operating rates,were generally adopting a demand-driven purchasing strategy, leading to a price-sensitive market stalemate. These multiple factors were keeping the melamine market in a weak equilibrium in the short term, with a weak outlook expected moving forward.

Melamine production capacity utilization saw a slight increase last Wednesday. Supported by existing orders, manufacturers were temporarily facing limited pressure to ship goods. However, as orders were gradually fulfilled, market supply is expected to increase. Downstream suppliers were clearly resistant to high-priced raw materials, and their acceptance was low. To maintain shipments, manufacturers may need to adjust their pricing strategies and mindset.

Urea prices were temporarily stable in the mainstream market, but quotations showed signs of easing and declining in some regions. As of July 28th, the benchmark price for urea on SunSirs was 1,825.00 RMB/ton, up 0.11% from 1,823.00 RMB/ton at the beginning of the month. The urea market entered a wait-and-see phase. Despite demand from downstream suppliers for replenishment, cautious trading resulted in smaller orders. Supply pressure remained high, with daily production remaining high. Meanwhile, the inverted international price gap and weaker coal prices exacerbated bearish market sentiment. However, factories had backlogs of orders and low inventories, keeping prices stable for now. Amidst the interplay of various factors, the market is expected to remain volatile and weaker in the short term.

Future outlook:

Overall, the melamine market lacked strong support. In the short term, the market remains stagnant, relying on existing pre-orders. However, as these orders are gradually absorbed, supply and demand will once again enter a tug-of-war. Future price trends will depend on the dynamics of supply and demand, fluctuations in raw material costs, and evolving market sentiment.

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