Supply Tightening, Melamine Market Shows Slight Rebound in China

November 25th, News

This week, the melamine market in China showed a slight upward trend. As of November 25th, the benchmark price of melamine was 5,450.00 CNY/ton, an increase of 0.23% compared to the beginning of the month (5,437.50 CNY/ton). Regionally, the Hebei area showed the strongest performance.

This small-scale general price increase can mainly be attributed to the following reasons:

Cost Side:

Melamine's main raw material is urea. According to market data on November 25, the benchmark price of urea was 1657.50 CNY/ton, an increase of 3.11% from the beginning of the month (1607.50 CNY/ton). The overall market has shown signs of recovery. The stabilization of raw material costs has provided some bottom support for the price of melamine.

Currently, the capacity utilization rate of the melamine industry in China remains high with some fluctuations. This may indicate that some companies are experiencing tightening in local supply due to adjustments in equipment or sales strategies, which has driven a short-term increase in prices.

Demand Side:

It's important to note that overall demand in the downstream market has not shown any significant improvement, remaining relatively subdued. As a result, this round of price increases is more accurately described as a "catch-up rally" or a "modest rebound," rather than a sharp rise driven by robust demand. Earlier industry analyses indicated that key downstream applications of melamine—such as engineered wood panels—are still experiencing weak demand, largely due to the ongoing challenges in the real estate sector.

Overall, the recent melamine market in China has experienced a slight rebound driven by the recovery of costs and short-term adjustments in supply. However, due to the lack of fundamental improvement in terminal demand, the overall upward potential of the market may be limited.

In the short term, prices may maintain a strong and volatile trend, but whether this strength can be sustained in the long term will require close attention to the recovery of downstream demand and the operational stability of various production enterprises in China.