Market Trends Overview

This week, the melamine market was characterized by prices holding steady at high levels, while trading activity gradually slowed down. According to data from SunSirs, the benchmark price for melamine reached 9,450.00 RMB/ton on April 2—an increase of 0.27% compared to the beginning of the month—marking a transition into a phase of temporary stabilization following a period of strong upward momentum. An analysis of the price trajectory reveals that melamine prices entered a mode of rapid escalation in mid-to-late March, achieving significant gains within the span of just one month. Although prices remained at elevated levels in early April, signs of marginal weakening have emerged on the trading front, as downstream sectors increasingly demonstrate resistance to high-priced supplies.

Decelerating Factors

Demand Side:

Current melamine prices have breached the 9,000 RMB/ton mark, far exceeding the cost-bearing thresholds of downstream industries such as panel manufacturing and coatings. As prices continue their upward trajectory, the pace of inventory replenishment among downstream enterprises has slowed significantly; they have shifted from the previous strategy of "stockpiling amidst rising prices" to "sporadic, on-demand purchasing." Consequently, the volume of new orders has contracted, and a wait-and-see sentiment has intensified across the market—factors that constitute the primary reasons for the slowdown in trading activity observed this week.

Supply Side:

In the preceding period, operating rates within the melamine industry remained at low levels. Compounded by factors such as plant maintenance and environmental inspections, market supply became tight, leading manufacturers to demonstrate a strong inclination to hold firm on pricing and limit sales. However, as prices continued their upward surge, some producers gradually resumed operations; with pending orders now being delivered, the volume of circulating spot inventory has increased. Consequently, the supportive influence of the supply side on pricing has begun to weaken marginally.

Cost Side:

Although the price of urea—the primary feedstock for melamine—remains at elevated levels, its upward momentum narrowed this week. Meanwhile, international LNG prices have stabilized. Consequently, while the cost transmission chain running from methanol to urea and ultimately to melamine continues to provide support, it no longer exhibits the aggressive upward-pulling dynamic observed previously; the cost side's influence on melamine has thus shifted from a "strong driving force" to a "weak supportive factor."

Market outlook

Based on current market supply and demand, production costs, and transaction activity, the future price trend for melamine is projected in three distinct stages:

Short Term (1–2 weeks): High-level fluctuation, with slight upward movement or stabilization

In the short term, geopolitical conflicts show no signs of significant de-escalation, and the tight global supply landscape for fertilizers remains unchanged, with support from raw material markets still intact. Concurrently, manufacturers continue to hold a backlog of pending orders, ensuring that their inclination to maintain—or even push—prices has not yet fully subsided. Melamine prices are therefore expected to fluctuate at a high level within the 9,400–9,800 RMB/ton range. While the possibility of minor, tentative price hikes cannot be ruled out, trading volume is unlikely to see any substantial increase, thereby limiting the potential upside.

Medium Term (Within 1 Month): The risk of a pullback from high levels intensifies, and prices undergo a gradual correction.

If downstream resistance to high prices continues to intensify and trading volume contracts further—compounded by increased supply as some enterprises resume production—the supply-demand imbalance will gradually ease. Concurrently, should geopolitical tensions subside and international prices for urea and LNG decline, the underlying cost-support rationale will weaken. At that juncture, melamine prices may undergo a correction; they are projected to retreat to a range of 8,500–9,000 RMB/ton, as the current high-level premium is gradually absorbed.

Long-term (1–3 months): Reverting to fundamentals, trading within a range

In the long term, the fundamental landscape of excess melamine production capacity remains unchanged. Domestic demand consists primarily of essential needs; while export volumes have seen some growth, they are unlikely to fully offset the shortfall in domestic demand. On the cost front, the market is expected to return to rationality, shedding the influence of geopolitical risk premiums to realign with supply-and-demand fundamentals. Prices are projected to fluctuate within the range of 7,500 to 8,500 RMB/ton, exhibiting an overall trend characterized by a "retreat from high levels followed by stable operation."

In summary, key factors to monitor include trends in raw material urea prices, fluctuations in operating rates within the melamine industry, operating rates and transaction data in the downstream panel industry, and geopolitical developments in the Middle East (which impact global fertilizer supplies). Should geopolitical conflicts continue to escalate and raw material prices surge once again, melamine prices could remain at elevated levels—potentially exceeding current expectations. Conversely, if downstream demand experiences a rapid recovery and market transactions pick up, the pace of any price correction could be slowed. However, if a concentrated release of new domestic production capacity occurs—thereby exacerbating pressures from oversupply—the magnitude of the subsequent price correction could prove greater than anticipated.

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