Weak Balance Under Cost Support—Melamine Market Struggles to Stay Firm

January 13th, News

This week, the market price of melamine has shown some softening and has not exhibited a fully "firm operation" characteristic. The overall market is under the expectation of oversupply, with prices supported by cost but weak demand. As of January 13, the benchmark price of melamine was 5625.00 CNY/ton, a decrease of 0.22% compared to the beginning of the month (5637.50 CNY/ton).

Supply Side:

The current situation on the supply side leans more toward “expected easing” combined with “real-world pressure.” In the absence of robust demand, even if the utilization rate remains low, sluggish shipments can nonetheless create de facto supply pressures. This explains why the market has failed to see a “firmly sustained performance” driven by tight supply—and instead, some companies have resorted to price cuts.

Demand Side:

Downstream industries such as panels and coatings in China have not shown improvement, and demand has always been the weak link in the market. Without strong demand to drive it, the market cannot truly become "firm."

Cost side:

As of January 13, the benchmark price of urea stood at 1,745.00 CNY per ton, up 1.16% from the beginning of this month (1,725.00 CNY per ton). In 2026, the urea industry is in a capacity expansion cycle, putting significant pressure on supply. It is expected that the average price for the year will continue to decline, thereby weakening the most important cost support for melamine in the future.

Overall, the current melamine market in China is characterized by a coexistence of "weak reality and weak expectations."

Weak reality: In early January, two major producers (Shanxi Fengxi, Sichuan Yulong) have lowered their ex-factory quotes by 50 CNY/ton, directly refuting the general "firm operation" of price increases. At the same time, many mainstream companies are maintaining stable prices or adopting a wait-and-see attitude.

Weak Expectation: The market's forecast for the entire year of 2026 is that supply will be loose and cost support will weaken, which will limit the room for price increases.

Therefore, the so-called "resilience" is more likely to be reflected in the price not experiencing a panic-driven sharp drop in the short term, instead finding support and fluctuating near the cost line. However, this is a weak and lackluster balance with no upward momentum.