SunSirs: Both Supply and Demand Were Weak, Melamine Market Sentiment Was Sluggish

Price trend

The melamine market was indeed in a downturn last week, with weak supply and demand, putting downward pressure on prices. As of September 16, the benchmark price of melamine on SunSirs  was 5,650.00 RMB/ton, down 0.22% from the price of 5,662.50 RMB/ton at the beginning of the month.

Analysis review

From the perspective of regional markets, the ex-factory quotation in East China was 5,130-5,350 RMB/ton, and it was clearly stated that "partially negotiable", indicating that there was room for preferential treatment in actual transactions; the quotation in Southwest China (Chongqing Jianfeng) was 5450 RMB/ton; and in North China it was around 5125 RMB/ton.

The price of upstream raw material urea is also falling. As of September 16, the benchmark price of urea on SunSirs was 1,665.00 RMB/ton, down 2.77% from the price of 1,712.50 RMB/ton at the beginning of this month. This has weakened the cost support for melamine.

Supply Side:

Capacity Utilization Fluctuated at a High Level: Although industry capacity utilization fell 3.6 percentage points to 55.38% on September 4th from the previous period (58.98%), it remained relatively high overall. Capacity utilization and weekly output are expected to increase slightly last week (the week of September 15th). Corporate Inventories Under Pressure: Due to the combined effects of high operating rates and sluggish demand, some companies were facing inventory pressure.

Demand Side:

Continued weak downstream demand was the primary cause of the market downturn:

Weak purchasing intention: Downstream companies primarily purchased on demand, with few new orders placed, creating a weak buying and selling atmosphere. As prices continued to fall, this had further dampened downstream purchasing enthusiasm.

Sluggish end-use industries: Major melamine consumption sectors, such as wood-based panels, coatings, and molding compounds, were closely tied to the real estate industry. The ongoing downturn in the real estate industry has led to sluggish demand in these end-use industries, which in turn has reduced demand for melamine. For example, from January to July this year, national production of wood-based panel and surface decorative panels decreased by 7.64% year-on-year.

Future outlook:

Negative factors are expected to continue to dominate the melamine market in the short term, and the market is likely to remain weak. Without significant improvement in demand, companies may face further price declines due to sales pressure. The core market conflict lies in the imbalance between high supply and weak downstream demand. It remains to be seen whether downstream production resumption after the end of autumn will lead to a recovery in demand.

In summary, as of September 16, the melamine market was characterized by falling prices, significant supply pressure, continued weak demand, and profitability difficulties for companies. A significant market recovery is unlikely in the short term, and a stabilizing price rebound may require a more substantial supply contraction or a substantial improvement in downstream demand.

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