Price trend

Overall, the domestic melamine market has continued its weak trend recently. On November 5th, the benchmark price of melamine on the business information platform was 5,387.50 RMB/ton, a decrease of 0.92% compared to the beginning of the month (5,437.50 RMB/ton), placing it at the low end of the year's price range. Although some individual companies had made flexible price adjustments, it was difficult to reverse the overall downward trend of the market.

The market prices have declined slightly since the beginning of the month, indicating downward pressure. However, the market's "flexibility" was also reflected here. Taking Hebei Xinji Jiuyuan Chemical as an example, although it raised its quoted price by 50 RMB/ton to 5,350 RMB/ton on November 5th, the actual transaction price was still "negotiable." This reflected that producers were trying to tentatively maintain prices, but due to the lack of solid market demand, the final transaction was often accompanied by discounts. This phenomenon of "ostensibly stable but actually lowering prices" or "flexible negotiation" was a true reflection of the market.

Market Analysis

Supply side:

Domestic melamine production capacity was already at a high level. Although the industry's operating rate remained at around 70%, social inventory was still high, and market supply was ample.

Demand side:

The demand for melamine was closely linked to the real estate industry's performance, with over half of its production used in the manufacture of wood-based panels. The adjustment in the real estate market had directly led to a contraction in orders for downstream wood-based panel manufacturers, resulting in their procurement of melamine mainly consisting of small, immediate orders, which was insufficient to support a price rebound.

Cost Side:

The price of urea, a key raw material, also remained low during the same period. As of November 5th, the benchmark price of urea from the business information platform was 1,585.00 RMB/ton, a decrease of 1.4% compared to the beginning of the month (1,607.50 RMB/ton). This lowered the production cost of melamine, depriving it of a key supporting factor from the cost side and further exacerbating the bearish sentiment in the market.

Market outlook

In summary, given the ample supply and weak demand, the melamine market is unlikely to see any improvement in the short term. The market is expected to consolidate and weaken, with the price center potentially facing further downward pressure. Any market fluctuations will be localized and temporary, unlikely to create a widespread upward trend.

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