2025 Market Review: Volatile downward trend, followed by a sharp rebound at the end of the year
Throughout 2025, the melamine market operated in a pattern of initial decline followed by a recovery, but ultimately ending the year with an overall decrease in price, with a significant downward shift in the average price level.
1. High opening at the beginning of the year, followed by a weakening trend: The price started the year (January 1st) at a relatively high level of 6,322.50 RMB/ton, but the upward momentum was weak, and it soon turned into a decline.
2. A prolonged downward trend: Starting in February, prices entered a continuous, one-way downward trend that lasted for nearly three quarters. Although there were brief periods of consolidation, the downward trend remained unchanged, reaching its lowest point of the year at 5,412.50 RMB/ton on November 17th, a cumulative decrease of 14.39% from the year's high. This prolonged decline primarily reflected:
Supply pressure: The industry may face pressure from increased production capacity or high operating rates.
Weak demand: Demand from core downstream industries such as sheet metal and coatings (which are closely related to the real estate sector) remained sluggish, leading to cautious purchasing.
Costs and market sentiment: Fluctuations in the raw materials market and bearish expectations had intensified the downward pressure on prices.
3. Significant rebound at the end of the year: After hitting a low point, the market experienced a "V-shaped" rebound in the more than a month leading up to the end of the year, rapidly rising to 5,675.00 RMB/ton by December 23rd, a rebound of approximately 4.85% from the lowest point. This indicated that:
The price had reached strong support: the level around 5,412.50 RMB/ton may have touched the cost line or psychological bottom line for most producers, leading to reluctance to sell or production shutdowns for maintenance.
Short-term positive factors included: plant shutdowns, potential boost from downstream pre-holiday inventory replenishment, short-term increase in export orders, or strengthening upstream raw material prices.
Annual Summary: Despite a significant rebound at the end of the year, the closing price in 2025 (5,675.00 RMB/ton) was still down 10.24% compared to the beginning of the year, indicating that bearish forces dominated the market throughout the year, and the market as a whole was in a process of searching for a bottom and shifting to a lower price level.
The price trend in 2025 (a long-term unilateral decline followed by an oversold rebound at the end of the year) clearly revealed the core contradiction on the demand side: for most of the year, actual downstream demand was unable to absorb market supply, leading to continuous inventory pressure and pessimistic sentiment being transmitted to prices.
Looking ahead to 2026, demand will be the key factor determining whether the market continues its rebound, consolidates at a bottom, or experiences another downturn. The following is a detailed analysis based on the demand side:
Analysis of the core drivers of demand
The downstream demand for melamine is mainly composed of three parts: panels and decorative paper (approximately 60%), coatings and molding plastics (approximately 30%), and others (paper, textiles, flame retardants, etc.). Its market performance is closely linked to real estate, home furnishings, and exports.
1. Domestic construction and home furnishing demand: Bottoming out and stabilizing, unlikely to see strong stimulus
In 2026, large-scale "incremental" real estate development is unlikely to reappear. The main support for demand will come from policy-driven projects involving existing properties, such as completing unfinished housing projects, urban village redevelopment, and renovation of old residential areas. This will provide a relatively solid "floor" for melamine demand, preventing an unlimited decline like that seen in 2025. However, this portion of demand is more likely to manifest as "steady release" rather than "explosive growth."
The fundamental shift in consumer expectations regarding the real estate market and income prospects means that demand for customized home furnishings and new home renovations, which are strongly linked to new home sales, will be difficult to recover quickly. This suppresses the potential for growth and the price ceiling for melamine demand. The recovery in demand will be slow and structural.
2. Export Demand: The Key "Unknown Factor" and Main Variables
Exports are the most important valve for digesting excess domestic melamine production capacity and balancing supply and demand. The strong rebound in prices in November 2025, after hitting a low point, is likely related to overseas inventory replenishment before the year-end holidays and a temporary increase in export orders.
If manufacturing and construction activity in major global economies (such as Southeast Asia, the Middle East, and South America) recovers in 2026, or if Chinese melamine maintains strong competitiveness due to its cost advantage, and export orders continue to improve, this will become the core engine driving prices, potentially leading to a volatile upward trend.
If the global trade environment deteriorates, or overseas demand weakens due to an economic recession, and the export "engine" stalls, the domestic market will be forced to rely entirely on domestic demand. With domestic demand only able to provide a basic level of support, the market will revert to a situation of oversupply, making prices highly susceptible to downward pressure and likely to fluctuate within a low range.
3. Demand in other industrial sectors: Stabilizers and potential growth areas
Demand in sectors such as papermaking, textiles, and flame-retardant materials remains relatively stable, linked to the overall activity of the macroeconomy. This segment acts as a "stabilizer" for demand. Potential bright spots lie in environmental protection and upgrading demands. For example, the increased demand for formaldehyde-free boards and high-end environmentally friendly coatings may drive the consumption of high-quality melamine. However, this segment accounts for a relatively small proportion and represents more of a structural opportunity, unlikely to drive the overall market independently.
Scenario outlook for market trends in 2026 (based on demand-side factors)
Based on the analysis above, the melamine market in 2026 may present the following three scenarios, with the probability and core triggering conditions of each scenario directly related to demand:
1. Baseline scenario (highest probability): Weak demand recovery, price fluctuations within a range
Domestic policies are providing support and demand remains stable, but the real estate sector is generally weak; export markets are performing moderately, without exceeding expectations. The market lacks strong drivers for a sustained upward or downward trend. Prices will fluctuate widely between the production cost line (around 5,400 RMB/ton, forming strong support) and the pressure level caused by weak demand (around 5,900-6,000 RMB/ton). The rebound at the end of 2025 served as an effective "bottoming confirmation," but it failed to develop into a reversal. Trading opportunities will primarily be based on short-term price swings.
2. Optimistic scenario: Strong export demand drives prices upward with some volatility
Strong overseas demand and continuously growing export orders are effectively alleviating domestic supply pressure. At the same time, domestic demand is not deteriorating further. Driven by this "export engine," the supply-demand balance has improved substantially. Prices are expected to continue the rebound trend seen at the end of 2025, attempting to challenge and stabilize above 6,000 RMB/ton points, exhibiting a pattern of "rising center of gravity and upward fluctuations." The height and sustainability of the price increase will directly depend on the strength of exports.
3. Pessimistic scenario: Both domestic and external demand weaken simultaneously, and prices hit a new low.
Domestic inventory release fell short of expectations, and the export market contracted significantly, creating dual pressure from both domestic and international demand. The rebound at the end of 2025 proved to be merely a fleeting inventory replenishment rally. With overall demand contracting, prices will turn downwards again after the rebound, testing and potentially falling below the 2025 low (5,412.50 RMB/ton), and the industry will enter a more painful phase of capacity reduction.
Overall assessment: In 2026, the demand side of the melamine market is unlikely to provide strong upward momentum, but it is expected to establish a price range with both a floor and a ceiling. Prices are unlikely to return to the high levels seen at the beginning of 2025, but the possibility of a significant drop below the 2025 lows is also reduced due to policy support.
Conclusion: The market in 2026 will most likely unfold amidst a struggle between "domestic demand support" and "overseas export variables." The most probable scenario is range-bound trading under the baseline scenario. Market participants should closely monitor changes in export data, as this will be the key to breaking the trading range and determining the market direction.
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