Raw Material Costs Remain High, Melamine Prices Slightly Increase in China

January 28th, News

Recently, the overall melamine market in China has shown a slight upward trend. As of January 27, the benchmark price for melamine was 5637.50 CNY/ton, an increase of 0.44% compared to last week (5625.50 CNY/ton).

Recent price increases have been supported by the following factors:

Cost Rigidity Support: The price of urea, the primary raw material, remained high in January, significantly squeezing the profit margins of production enterprises and strengthening their willingness to maintain prices. As of January 28, the benchmark price of urea stood at 1,747.50 CNY per ton, up 1.30% from the beginning of the month (1,725.00 CNY per ton).

Supply Tightening: In January, many production enterprises in China scheduled plant maintenance or reduced load operations, leading to a decrease in the overall industry operating rate and a tightening of spot market supply.

Rigid Demand Procurement and Export Support: Downstream industries in China, such as sheet metal and coatings, generally adopt a demand-driven procurement strategy. At the same time, export demand remains at a healthy level, serving as a “stabilizer” for the Chinese market.

Short-Term Market Outlook

Currently, the market is characterized by a mix of bullish and bearish factors, and it is expected that prices will remain in a high and volatile range before the Chinese New Year. High costs and relatively tight supply form the basic support for market prices. Whether downstream industries will begin to stock up in large quantities before the Chinese New Year is key to breaking the current market balance and driving up prices. If the facilities that are shut down for maintenance after the holiday resume production in a concentrated and rapid manner, it may increase supply pressure.

In summary, the melamine market has recently shown a slight upward trend, driven primarily by cost pressures and tightening supply. Whether prices can continue to rise in the future will depend closely on downstream inventory levels ahead of the Spring Festival.