Supply Benefits Fade, Melamine Market Stabilizes After the Holiday in China

January 5th News

After the holiday, the market has entered a pattern characterized by “the boost from supply improvements fading and prices remaining temporarily stable.” The earlier market expectations of supply contraction due to localized plant maintenance have largely been absorbed. Meanwhile, downstream demand is recovering slowly, leaving the market lacking upward momentum and causing prices to enter a narrow trading range.

I. Market Dynamics and Price Performance

1. Price Trend:

Post-holiday market stabilizes: As of January 5th, the benchmark price for melamine is 5637.50 CNY/ton, unchanged from the beginning of the month and basically flat compared to the end of December 2025, with slight adjustments of ±50 CNY/ton in some regions.

The “price available but no market demand” phenomenon is becoming apparent: Although quoted prices remain stable, actual transaction activity in the market is generally moderate. Downstream buyers have limited acceptance of current prices and mostly opt for small, essential-need orders.

2. Supply side:

By the end of December 2025 and during the New Year's period, some maintenance facilities (such as those in Shandong and Xinjiang) have gradually resumed production, with the overall industry operating load rate increasing from about 65% before the holiday to 70%-72%. As supply has been restored, the market's previous concerns about supply shortages have dissipated. However, given that the current operating rate is still at a moderate level compared to the same period in previous years, there is no severe pressure of oversupply yet.

3. Cost Side:

The price of urea, the primary raw material, has also shown a stable-to-weaker trend following the holiday period. As of January 5, the benchmark price of urea stood at 1,725.00 CNY per ton, unchanged from the beginning of this month. Its cost-supporting effect on melamine remains limited.

4. Demand side:

II. Core Market Analysis

“Easing of positive factors” is the key phrase: The primary driver behind the modest rally in late December 2025—the contraction of supply-side maintenance—has come to an end. Market dynamics have shifted from “tightening supply expectations” to “the real interplay between supply and demand.”

The Game Behind “Temporary Stability”: The reason prices haven’t fallen immediately after supply resumed is mainly because:

1. Producers have a strong desire to stabilize prices: Most factories in China currently have no inventory pressure and are willing to hold prices firm near the cost line.

2. Demand has not been fully disproven: The market still anticipates a potential phase of restocking by downstream sectors before the Chinese New Year, forming an expectation of bottom support.

3. Absolute price position: The current price is in the middle to lower range over the past six months, and the room for further significant decline is somewhat limited.

In the short term, the market is expected to continue its pattern of “range-bound fluctuations amid a weak balance between supply and demand.” The next directional move in prices will depend on the evolution of the following key factors:

Summary: The current melamine market in China is in a transitional phase where "old drivers are phasing out, and new drivers have yet to emerge." It is recommended that market participants remain cautious and not have overly high expectations for one-sided market trends. Operations should focus on range trading and purchasing based on demand, while closely monitoring the actual data changes of the key points mentioned.