Weak Supply and Demand Continue to Weigh Down Melamine Market

September 08, News

Supply and demand are both weak, and the melamine market in China continues to be weak.

This week, the melamine market in China indeed continued its weak trend, with overall supply and demand both being weak, leading to a trend of downward pressure on prices. As of September 8, the benchmark price for melamine was 5687.50 CNY/ton, an increase of 0.44% compared to the beginning of the month (5662.50 CNY/ton).

Below is a price list for major regions:

Regional prices (CNY/ton) and price changes (compared to the previous period):
- East China region: September 3, RMB 5,130–5,350; slightly stable, with some room for negotiation.
- Anhui Jinhe: September 8, RMB 5,600; up by RMB 50.
- China average price: September 5, RMB 5,146, down 0.54% from the previous week.
- Shandong supply: September 7, RMB 5,300.
- North China region: September 5, RMB 5,125–5,300.
- Southwest (Chongqing Jianfeng): September 5, RMB 5,450; up by RMB 100.

The current melamine market in China mainly exhibits the following characteristics:

Overall, prices remained weak and consolidated: As the table shows, while some companies—such as Anhui Jinhe and Chongqing Jianfeng—raised their quotes slightly (by 50 CNY/ton and 100 CNY/ton, respectively), China's average price still fell by 0.54% compared to the previous period. Meanwhile, mainstream prices remained generally low, with ex-factory quotes in the East China region ranging from 5,130 to 5,350 CNY/ton—and notably, the text explicitly mentions that "some negotiations are possible," indicating that there is room for discounts in actual transactions.

Demand remains weak: The market exhibits a "predominantly bearish buying and selling atmosphere," with downstream companies primarily purchasing only what they need, resulting in sparse new order completions. This is largely due to the ongoing downturn in end-user industries such as real estate, which has led to subdued demand in key consumption sectors like engineered wood products.

Industry capacity utilization rates remain relatively high, putting pressure on corporate inventories: Although the capacity utilization rate dropped slightly from the previous day on September 5 (to 57.92%), it continues to hover around a robust 58% overall. Amidst these high operating levels and subdued demand, some companies are facing growing inventory pressures.

Production profits are poor: Industry data shows that the production profit margin has turned negative (-1.38%) and is expected to continue declining. This indicates that at the current price levels, many enterprises in China are operating at a loss.

Raw material urea prices have declined: The price of upstream raw material urea has slightly decreased. As of September 8, the benchmark price of urea is 1703.75 CNY/ton, a decrease of 0.51% compared to the beginning of the month (1712.50 CNY/ton). This weakens the cost support for melamine and also drags down market sentiment from the cost side.

In the short term, the favorable factors for the melamine market in China are limited, and it is expected that the market will continue to fluctuate weakly. The core contradiction in the market lies in the imbalance between high supply levels and weak downstream demand. If there is no significant improvement in demand, it is not unlikely that prices may continue to fall slightly. Attention should be paid to whether the resumption of operations downstream after the end of autumn can bring about a recovery in demand.