After Hitting Bottom in 2025, Melamine Strongly Rebounds in China; Can 2026 See a Demand-Driven Turnaround?

December 24 news

2025 Market Review: Volatile Decline, Oversold Rebound at Year-End

In 2025, the melamine market in China showed an overall pattern of "initial decline followed by a rebound, but ending the year lower," with a significant downward shift in the price level.

1. Starting at a high point at the beginning of the year, the trend turned weaker: At the start of the year (January 1), prices were at a relatively high level of 6,322.50, but the upward momentum was weak and soon reversed into a downward trend.

2. The Prolonged Downward Channel: Since February, prices have entered a sustained, unidirectional downward trend lasting nearly three quarters. Although there were brief periods of consolidation during this time, the overall downward momentum remained unchanged, reaching the year’s lowest point of 5,412.50 on November 17—a cumulative decline of 14.39% from the year’s peak at the beginning of the year. This prolonged downward trend primarily reflects:

Supply Pressure: The industry may face pressure from increased capacity release or higher operating rates.

weak demand： Core downstream sectors such as boards, coatings, and other industries (closely related to real estate) have been experiencing persistently weak demand, leading to cautious purchasing.

Costs and Market Sentiment: Volatility in the raw materials market and bearish expectations have intensified downward price pressure.

3. Significant Rebound at Year-End: After hitting a low point, the market staged a “V-shaped” rebound within just over a month before year-end, rapidly surging to 5,675.00 by December 23—a rebound of roughly 4.85% from the lowest point. This indicates:

The price has reached a strong support level: Around 5,412.50, the price may have touched the cost threshold or psychological bottom line for most production companies, prompting sellers to hold onto their goods or schedule maintenance.

Short-term positive catalysts: The shutdown of production facilities, potential pre-holiday restocking by downstream users, a short-term increase in export orders, or rising prices of upstream raw materials—any of these factors could provide a boost.

Year-End Summary: Despite a significant rebound at year-end, the 2025 closing price ($5,675.00) still fell by 10.24% compared to the beginning of the year, indicating that bearish forces dominated the entire year’s market performance and that the overall market is in a process of finding a bottom and shifting its center of gravity downward.

From the price trend in 2025 (a long-term one-sided decline → a rebound at the end of the year), it is clear that the core contradiction on the demand side is: for most of the year, the real demand downstream could not absorb the market supply, leading to inventory pressure and pessimistic sentiment continuously affecting prices.

Looking ahead to 2026, the demand side will be the key to determining whether the market continues to rebound, consolidates at the bottom, or bottoms out again. Here is a detailed analysis based on the demand side:

Analysis of Core Demand Drivers

Melamine downstream demand is mainly composed of three parts: panels and decorative paper (about 60%), coatings and molding plastics (about 30%), and others (paper, textiles, flame retardants, etc.). Its market performance is closely linked to real estate, home furnishings, and exports in China.

1. Chinese Construction and Home Demand: Stabilizing at the Bottom, Unlikely to See Strong Stimulus

In 2026, large-scale “incremental” real estate development is unlikely to reappear. The primary support for demand will come from policy-driven existing projects such as the completion of “ensuring building delivery,” urban village redevelopment, and renovation of old residential communities. This will provide a relatively solid “bottom” for melamine demand, preventing an unbounded decline like the one seen in 2025. However, this segment of demand is more likely to manifest as a “steady release” rather than “explosive growth.”

The fundamental shift in consumers’ expectations regarding the real estate market and their income prospects means that demand for custom home furnishings and newly built renovations—both closely tied to new housing—will find it difficult to rebound quickly. This, in turn, has capped the potential for melamine demand and put a ceiling on its prices. The recovery in demand will be slow and structurally driven.

2. Export Demand: The Key “Unknown Factor” and Major Variables

Exports are the most important mechanism for digesting China’s excess production capacity and balancing supply and demand for melamine. After hitting a low in November, prices rebounded strongly in 2025, likely due to pre-holiday inventory replenishment overseas at year-end and a temporary increase in export orders.

If the manufacturing and construction sectors in major global economies (such as Southeast Asia, the Middle East, and South America) recover in 2026, or if Chinese melamine maintains strong competitiveness due to its cost advantage and export orders continue to improve, it will become the core driver of price increases, potentially leading to a trend of fluctuating upward movement.

If the global trade environment deteriorates, or if overseas demand weakens due to an economic recession, and exports as an "engine" stall, the Chinese market will be forced to rely entirely on domestic demand. In a scenario where Chinese demand can only provide a "safety net," the market will revert to a state of oversupply, making prices highly susceptible to pressure once again, leading to a low-range fluctuation.

3. Demand from Other Industrial Sectors: Stabilizers and Potential Growth Areas

Papermaking, textiles, and flame-retardant materials have relatively stable demand, which is related to the overall economic activity in China. This part serves as a "stabilizer" for demand. The potential bright spots lie in environmental protection and upgrade demands. For example, the growing demand for formaldehyde-free boards and high-end eco-friendly coatings may drive the consumption of high-quality melamine. However, this portion accounts for a relatively small share and represents more of a structural opportunity, making it difficult to independently boost the overall market.

Scenario Outlook for Market Trends in 2026 (Based on the Demand Side)

Based on the analysis above, the melamine market in 2026 could unfold according to the following three scenarios, each with probabilities and core triggering conditions directly linked to demand:

1. Base case (highest probability): Weak demand recovery, price range fluctuating.

Chinese policy supports stable demand, but the real estate sector as a whole is weak; the export market performance is mediocre, with no extraordinary results. The market lacks strong drivers for a unilateral rise or fall. Prices will fluctuate widely between the production cost line (around 5400, forming strong support) and the pressure level caused by weak demand (around 5900-6000). The rebound at the end of 2025 serves as an effective "bottom confirmation," but it cannot develop into a reversal. Trading opportunities will mainly be in short-term trends.

2. Optimistic Scenario: Strong export growth drives prices to rise amid volatile fluctuations.

Overseas demand is strong, and export orders continue to grow, effectively alleviating China's supply pressure. At the same time, domestic demand in China is not deteriorating further. Driven by the "engine" of exports, the supply and demand situation has seen a substantial improvement. Prices are expected to continue the rebound trend from the end of 2025, attempting to challenge and stabilize above 6000 points, presenting a pattern of "shifting the center of gravity upward and rising with fluctuations." The height and sustainability of the increase will directly depend on the strength of exports.

3. Pessimistic scenario: Both domestic and foreign demand in China are weak, causing prices to bottom out again.

China's existing projects have not met expectations, and at the same time, the export market has significantly shrunk, creating dual pressures from both domestic and external demand. The rebound at the end of 2025 proved to be only a fleeting restocking rally. With a comprehensive contraction in demand, prices will fall again after the rebound, testing and possibly breaking the 2025 low (5412.50), and the industry will enter a more painful phase of capacity reduction.

Overall Judgment: In 2026, the demand for melamine in the Chinese market is unlikely to provide strong unilateral upward momentum, but it is expected to form a "floor and ceiling" range. Prices are unlikely to return to the high levels seen at the beginning of 2025, but the possibility of a deep drop below the 2025 lows is reduced due to policy support.

Conclusion: The market trend in 2026 will likely unfold in the interplay between "China's bottom-line demand" and "overseas export variables." The most probable scenario is a range-bound oscillation under the baseline scenario. Market participants should closely monitor changes in export data, which will be the key to breaking the oscillation pattern and determining the direction of the market.