Price trend

Recently, the melamine market indeed showed signs of tentative price increases amid an overall sluggish market, but price trends had diverged significantly across different regions and companies. As of November 18, the benchmark price of melamine on SunSirs was 5,412.50 RMB/ton, an increase of 0.91% compared to the previous week (5,375.50 RMB/ton).

Analysis review

Localized price increases: On November 18th, Chongqing Jianfeng raised its ex-factory price by 50 RMB/ton to 5,300 RMB/ton. This move was widely interpreted by the market as a tentative increase, reflecting a possible short-term improvement in supply and demand in the Southwest region.

The market was showing signs of divergence: In contrast, on November 17th, Shandong-based major producer Hualu Hengsheng lowered its ex-factory price by 100 RMB/ton to 5,200 RMB/ton. This mixed picture suggests that the price increase was not a nationwide phenomenon, but rather a regional market phenomenon.

This small, localized price increase needed to be viewed within the broader context of the industry's long-term weakness.

Rigid support from the cost side:

The price of urea, the main raw material for melamine, was already relatively high compared to the same period last year. As of November 18th, the benchmark price of urea from SunSirs was 1,630.00 RMB/ton, an increase of 1.40% compared to the beginning of the month (1,607.50 RMB/ton). Particularly in the southwest region, a major production area for natural gas-fired urea, production costs remained high, and there were even expectations of further increases, due to anticipated tight natural gas supplies during the winter and the need to ensure supplies for residential use.

Long-term supply-demand imbalance:

Authoritative industry analysis points out that the melamine industry was facing a severe supply-demand contradiction. On the supply side, production capacity continued to expand; while on the demand side, nearly 60% of demand was tied to the sluggish real estate and building materials markets, resulting in insufficient overall demand support. This had kept the market in a long-term downward trend.

Short-term volatility:

Therefore, the tentative price increase should be viewed as a short-term and regional price correction. It indicates that some companies, supported by cost pressures or short-term orders, are willing to tentatively raise prices, but this has not changed the overall market situation of supply exceeding demand.

Market outlook

In conclusion, the melamine market has indeed shown signs of a tentative price increase recently, mainly reflected in price adjustments by individual companies in Southwest China. However, due to regional market differentiation and the lack of fundamental improvement in the long-term supply and demand fundamentals, the sustainability of this price increase remains to be seen. The market as a whole is still in a phase of bottoming out and searching for a new equilibrium.

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