Price trend:

Recently, the melamine market has been "operating steadily" against a backdrop of "high capacity utilization and weak demand." As of December 16, analysts at SunSirs believe that prices mainly remained at a high level with slight downward pressure, rather than continuing to rise. The core reason was that the supply contraction and cost support were insufficient to offset the weak downstream demand. As of December 16th, the SunSirs benchmark price for melamine was 5,675.00 RMB/ton, an increase of 1.34% compared to the beginning of the month (5,600.00 RMB/ton).

Market Analysis

Supply Side:

The core change in market supply recently was a proactive contraction. The overall industry operating rate had decreased from 62.20% at the end of November to 60.80% at the beginning of December. This was mainly due to some companies scheduling winter maintenance and some regions being affected by environmental protection measures, resulting in a month-on-month decrease in production. Major producers had relatively low inventory pressure due to strong order fulfillment in the previous period, and there was no significant accumulation of social inventory. However, it is important to recognize that by the end of 2025, the industry's total production capacity is expected to reach 2.6 million tons, while the long-term capacity utilization rate is below 70%. This massive overcapacity remained the fundamental factor suppressing upward price movements.

Overall impact: The short-term supply contraction directly reduced the available supply in the market, which was the most direct driving force supporting the price to remain at a high level rather than falling.

Demand Side:

The state of demand was the core constraint preventing the market from strengthening, despite its "firm" state. Approximately 60% of melamine consumption was used in the artificial board industry, and its demand was deeply tied to the health of the real estate market. As of December 16, downstream factories had weak order books and low operating rates, leading them to primarily purchase raw materials on an as-needed basis, lacking the motivation for large-scale inventory replenishment. Theprice level of melamine had triggered significant resistance from downstream buyers. Downstream factories generally believed that the price was detached from actual demand, resulting in a rapid decline in new orders after price increases, creating a situation of "high prices but no transactions." The international market was performing generally poorly, failing to provide any additional support to the domestic market.

Overall impact: Weak demand was unable to provide any positive support for price increases and instead constitutee a clear price "ceiling," significantly diminishing the positive effects from the supply and cost sides.

Cost side:

The cost side provided the most fundamental support. The price of urea, the core raw material for melamine production (approximately 3 tons of urea are needed to produce 1 ton of melamine), had been rising since December. As of December 16th, the benchmark price of urea according to SunSirs was 1,715.00 RMB/ton, a 3.47% increase compared to the beginning of the month (1,657.50 RMB/ton).

The increase in urea prices had significantly raised the manufacturing cost of melamine at the production source. This makes it impossible for manufacturers to drastically lower prices below the cost line, even when demand is weak, thus creating a solid "bottom line" for market prices.

Industry Outlook:

It should be noted that the recent "strength" was merely a short-term fluctuation within a long-term downward trend. The industry iwas suffering from severe overcapacity, with production continuing to increase, while the capacity utilization rate had fallen from 71% in 2024 to 69% in the first eight months of 2025. Furthermore, the core downstream market was highly dependent on the real estate sector, leading to weak demand. Average prices in the first eight months of 2025 fell by 20% year-on-year, severely squeezing corporate profit margins. Therefore, the industry consensus is that it is essential to "strictly control production capacity" and seek breakthroughs through technological innovation and the development of high-end downstream products (such as low-formaldehyde resins).

Overall, the market is expected to maintain a high-level volatile trend in the short term. Prices may be supported if supply remains tight or costs continue to rise; however, if downstream resistance intensifies or factory operating rates recover, prices may face downward pressure.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.