Cost Support Overlaid with Tightening Supply—Melamine Prices Remain Consolidated

January 22nd, news:

Entering January 2026, the melamine market in China has continued the stable pattern from the end of last year, with prices showing a typical "high price, low volatility" characteristic. According to price tracking data, from the end of December 2025 to January 21, 2026, the mainstream market price for industrial grade (premium quality) has consistently operated within the narrow range of 5633-5666 CNY/ton. Particularly since January 3, when the price was reported at 5633 CNY/ton, it has remained at this level for three consecutive weeks, demonstrating extremely strong stability.

The formation of this steady-state pattern is not driven by a single factor, but rather results from the combined balance among three key factors: China’s costs and supply, overseas imports and exports, and China’s rigid demand.

1. Cost Side:

This month, the primary supporting force in the market comes from the upstream of the industrial chain and the supply side. The price of raw material urea has remained persistently high; as of January 22, the benchmark urea price stood at 1,750.00 CNY per ton, up 1.45% from the beginning of the month (1,725.00 CNY per ton). This provides rigid cost support for melamine, significantly squeezing the profit margins of producing enterprises and thereby strengthening their willingness to maintain prices.

2. Supply side:

In January, many production enterprises in various regions of China arranged for plant shutdowns for maintenance or reduced load operations, leading to a month-on-month decrease in the overall industry operating rate. The market's spot supply showed a marginal tightening trend. Cost pressure and the proactive reduction of supply worked together to firmly support the bottom of market prices, making the downward space for prices extremely limited.

3. Demand Side:

Market demand on the consumer side is currently stable. Downstream industries such as board materials and coatings generally adopt a strategy of purchasing only when needed, with transactions mainly consisting of small, essential orders. Although the Spring Festival is approaching, the anticipated large-scale pre-festival stocking wave has yet to gain significant momentum, and overall market sentiment remains cautious. This lukewarm demand situation, coupled with tightening supply, is the primary reason prices have failed to rise rapidly and have instead entered a period of high-level consolidation.

4. Imports and Exports:

The import and export data for December 2025 provided the market in January with a neutral-to-mildly bullish external environment.

On the export front: In December, the export volume reached 56,900 tons, representing a slight month-on-month increase of 2.50%. The average export price remained stable at USD 703.09 per ton. This indicates that overseas demand continues to stay at a healthy level, providing China’s production capacity with a stable external outlet and playing the role of a “stabilizer” by preventing market collapse caused by insufficient domestic demand.

On the import side: In December, the import volume totaled only 19.73 tons, having virtually no substantial impact on China’s supply and demand. However, the average import price rose sharply by 27.69% month-on-month to USD 5,234.26 per ton. This signal, from a psychological perspective, has reinforced the Chinese market’s perception of persistently high international costs, indirectly bolstering producers’ confidence in maintaining higher prices.

Looking ahead to the market around the Spring Festival, the current stable equilibrium is likely to persist. Whether this balance can be disrupted hinges on four key variables. If post-holiday production facilities resume operations in a concentrated manner and at a faster-than-expected pace, supply pressures will significantly intensify. The strength of cost support for urea prices will directly reflect the degree of easing in raw material prices; as raw material costs begin to loosen from their high levels, the bottom support for melamine will also weaken accordingly. Additionally, it’s crucial to closely monitor whether downstream demand for inventory preparation and restocking after the Spring Festival will materialize as scheduled and whether the demand will be sufficient to absorb both existing and newly added supply. Exports serve as an important buffer for demand; therefore, we need to continue observing the resilience of overseas demand in 2026. Whether overseas markets can sustainably absorb China’s excess capacity will be critical to maintaining long-term market equilibrium.

In summary, the melamine market in January 2026 is characterized by a temporary equilibrium driven by strong internal factors—namely, costs and supply—and shaped by the interplay of stable external demand (exports) and still-undeveloped domestic demand. All market participants are closely monitoring pre-holiday stocking trends in search of clear signals that will help them pinpoint the direction of prices in the next phase.