Market Trends This Month:
According to monitoring data from SunSirs, in March 2026, the market price of melamine (premium grade, industrial grade, 99.8% purity) in the East China region surged from 5,970 RMB/ton at the beginning of the month to 7,575 RMB/ton on March 24—a single-month increase of 26.88%, marking a new high for the year.
Analysis of Market Drivers
The current surge is the result of a confluence between geopolitical shocks and industry fundamentals, with the former serving as the dominant force.
Geopolitical risks in the Middle East have emerged as a central factor
The conflict involving the United States, Israel, and Iran has plunged the Strait of Hormuz—the "chokepoint" of global energy and fertilizer trade—into a state of "functional closure." This strait carries approximately one-third of the world's seaborne fertilizer trade. The Middle East is not only a major global hub for liquefied natural gas (LNG) exports but also a leading producer and exporter of nitrogen fertilizers (urea). The conflict has directly triggered two major consequences:
Supply Chain Disruptions: Approximately 35% of the global seaborne urea trade has been disrupted, and exports from Iran—the world's third-largest urea exporter—have come to a virtual standstill. This has triggered panic regarding global fertilizer supplies, causing international urea prices to skyrocket by approximately 30% within a single week, reaching their highest level since 2022. As of March 24, the benchmark price for urea tracked by SunSirs stood at 1,857.50 yuan per ton, representing a 1.16% increase compared to the beginning of the month (1,836.25 yuan per ton).
Soaring Costs: Natural gas serves as the primary feedstock for global urea production. The conflict has forced the shutdown of LNG facilities in nations such as Qatar, driving a surge in international natural gas prices and, consequently, significantly elevating the production costs of overseas urea.
Cost Transmission and Sentiment Fermentation
The drastic fluctuations in the international urea market are profoundly impacting the domestic market through two distinct channels: cost transmission and market sentiment.
Cost Side: Although China's urea production is predominantly coal-based, the skyrocketing costs of international gas-based urea have created a strong comparative pricing effect and bullish market expectations. Concurrently, the global energy crisis triggered by ongoing conflicts has driven up domestic prices for coal and other alternative energy sources, thereby solidifying cost support for both urea and its downstream product, melamine, from the raw material end.
Export Front: The massive price spread between domestic and international markets—where the price differential for urea once exceeded 2,500 RMB per ton—has fueled market speculation regarding a potential relaxation of restrictions on domestic urea exports. Although current policy priorities remain focused on ensuring supply stability and price control, strong expectations of increased exports have intensified bullish sentiment within the domestic urea market, with this sentiment directly cascading down to its downstream product: melamine.
Downstream demand shows a cyclical rebound
Following the Spring Festival, operating rates in downstream sectors—such as board manufacturing and coatings—gradually increased, leading to a concentrated release of rigid demand for melamine. Driven by a "buy-on-the-rise" mentality, downstream enterprises actively replenished their inventories; this further amplified market purchasing fervor, thereby generating a demand-driven boost in the short term.
Domestic Supply Tightens Temporarily
Affected by environmental inspections, cost pressures, and scheduled maintenance at certain facilities, operating rates within the melamine industry have declined. With inventories running low, manufacturers have demonstrated a strong inclination to hold firm on pricing and limit sales, thereby intensifying the tightness of the spot market.
Market outlook
Geopolitical risk premiums persist, cost support remains robust, and market sentiment is strong; consequently, melamine prices are expected to remain at elevated levels—and may even continue their upward trajectory due to market momentum. However, caution is warranted regarding the potential for excessively rapid price hikes to dampen downstream demand. Market focus is set to shift back to supply-and-demand fundamentals and the interplay of policy factors. Should shipping through the Strait of Hormuz resume and international urea prices undergo a correction, the underlying logic supporting domestic costs would weaken. During the peak season for spring agricultural fertilization, the government's "ensure supply and stabilize prices" policy will continue to exert its influence. Whether restrictions on urea exports are eased will be a critical factor impacting the cost side of the melamine market.
Conclusion
The surge in the melamine market during March was, in essence, a cost-driven rally triggered by geopolitical crises in the Middle East. The closure of the Strait of Hormuz directly disrupted the global fertilizer supply chain, causing international urea prices to skyrocket; this impact subsequently transmitted to the domestic melamine market through the dual channels of rising production costs and shifting market sentiment. The market has currently priced in a significant risk premium; consequently, participants must closely monitor developments in the Middle East, trends in domestic urea export policies, and marginal changes in actual downstream transaction volumes, while remaining vigilant against the risk of a price correction once the current wave of market sentiment subsides.
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