Supply and Demand Tug-of-War: Melamine Market Sees Slight Upswing

November 18, news

This week, amid an overall sluggish market, there were indeed signs of a tentative increase in the melamine market, but price trends varied significantly across different regions and companies. As of November 18, the benchmark price for melamine in China was 5412.50 CNY/ton, up 0.91% from last week (5375.50 CNY/ton).

Partial Price Increase: On November 18, Chongqing Jianfeng raised its ex-factory price by 50 CNY per ton to 5300 CNY per ton. This move is widely interpreted by the market as a tentative increase, reflecting a potential short-term improvement in supply and demand in the southwestern region of China.

Market Shows Divergence: In contrast, on November 17, Shandong's leading producer, Hualu Hengsheng, lowered its ex-factory price by 100 CNY/ton to 5,200 CNY/ton. This "mixed pattern of rises and falls" highlights that the recent price hike was not a nationwide surge but rather a regionally driven market phenomenon.

This local and tentative small increase needs to be viewed in the context of the industry's long-term weakness in China.

1. Cost-side rigid support:

Melamine's main raw material, urea, was already at a relatively high price during the same period. As of November 18, the benchmark price for urea was 1630.00 CNY/ton, an increase of 1.40% compared to the beginning of the month (1607.50 CNY/ton). Particularly in the southwestern region of China, which is a hub for natural gas-based urea production, the expectation of tight natural gas supply and prioritization for residential use in winter has kept production costs high, with even further increases anticipated.

Long-Term Supply-Demand Imbalance: According to authoritative industry analysis, the melamine sector is currently grappling with a severe supply-demand contradiction. On the supply side, production capacity continues to expand; meanwhile, nearly 60% of demand remains tied to the sluggish real estate and construction materials markets, resulting in insufficient overall demand support. This situation has pushed the market firmly into a prolonged downward trend.

Nature of the Short-Term Fluctuation: Therefore, the current tentative price increase should rather be viewed as a short-term, region-specific recovery. It indicates that some companies, driven by cost pressures or supported by short-term orders, are willing to test higher pricing—but this does not alter the overall market dynamic of supply exceeding demand.

In summary, the melamine market has indeed shown signs of a "modest tentative increase" recently, primarily reflected in price adjustments made by individual companies in the southwestern region. However, given the regional disparities in the market and the lack of fundamental improvements in long-term supply-and-demand dynamics, the sustainability of this price hike remains uncertain. Overall, the market continues to oscillate at its lower end while actively seeking a new equilibrium.