SunSirs: Melamine Prices Continued to Rise as Supply Shrank

Price trend

Melamine prices have been on a continuous upward trend recently. As of August 19th, the benchmark price for melamine on SunSirs was 5,737.50 RMB/ton, a 1.07% increase from last week's 5,700 RMB/ton. Although still lower than the same period last year, the continued month-on-month increase indicated a steady upward trend in market prices.

Influencing factors

In early August, the melamine industry's operating rate briefly rebounded to around 50%. However, due to persistent high temperatures, plants in major production areas such as Sichuan and Anhui were forced to reduce their capacity, and the overall industry utilization rate fell back to 40%. This supply contraction led to persistently low market inventories, prompting some manufacturers to adopt a strategy of limiting order intake, driving prices upward.

By region: the transaction price in the northern region stabilized at a high level of around 6,000 RMB/ton; the mainstream price range in the central and eastern China markets was 5,700-5,900 RMB/ton; the southwestern region was affected by the contraction of local supply, and the price rose to 6,100 RMB/ton; the Xinjiang region showed an independent market trend due to the restriction of transportation radius, and the transaction price fluctuated narrowly in the range of 5,000-5,400 RMB/ton.

Urea prices are expected to fluctuate within a narrow range. As of August 19th, the benchmark urea price on SunSirs was 1,766.25 RMB/ton, down 2.55% from 1,812.50 RMB/ton at the beginning of the month. Meanwhile, the melamine market continued its upward trend, driven by shrinking supply. While the raw material market hasn't yet seen a strong driver, the overall stability of urea's costs remains a significant support. Coupled with the continued low industry operating rates, melamine prices are expected to continue their upward trend.

Market outlook

Overall, as of August 19, the melamine market remained dominated by three key factors: support from export pre-orders, a decline in industry operating rates to 40%, and significant support from raw material costs, all contributing to manufacturers' resolve to maintain prices. Although purchasing in the end-use panel industry has slowed due to high costs, the shortage of spot goods remains difficult to resolve in the short term (infrequent maintenance efforts are insufficient to offset the impact of low operating rates). Coupled with a growing market sentiment of "buy up," major companies were actively supporting prices. In the short term, prices are expected to continue to rise amidst the tight supply-demand balance, with no signs of easing the supply gap.

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