Cost and Supply Resonance Drives Up Prices—Melamine Market Rises Strongly

March 11th, News

Key takeaway: This week (as of March 11), China’s melamine market continued its strong upward trend. Driven by sharply rising raw material costs, a sudden tightening of supply, and concerted price-support efforts by major companies, the factory prices of leading enterprises saw daily increases as high as 400 CNY per ton, fueling strong bullish sentiment in the market.

I. Price Trends:

According to the data, on March 11, the benchmark price of melamine was reported at 6337.50 CNY/ton, a cumulative increase of 6.16% compared to early March (5970.00 CNY/ton). In terms of weekly performance, the cumulative price increase over the past week has reached 3.05%, indicating a clear trend of accelerating price increases.

II. Upward Drivers:

1. Cost Side:

This round of melamine price increase is primarily driven by a significant rise in the cost of upstream raw materials. Recently, the geopolitical events in the Strait of Hormuz have led to disruptions in the import of methanol, a key raw material for melamine, causing the price of methanol in China to increase by over 7% in a single day. This directly raised the production costs of urea. As a direct raw material for melamine, the upward pressure on the price of urea is clearly transmitted along the "methanol → urea → melamine" industrial chain, providing the most fundamental cost support for the increase in melamine prices.

2. Supply side:

While costs are rising, the supply side is also showing signs of tension. After the Spring Festival, some plant maintenance has not yet fully resumed, and the amount of spot goods circulating in the market is already limited. Against the backdrop of tightening supply, the market's "buying on rising prices" sentiment has been ignited, further fueling the upward trend in prices.

3. Enterprises Concentrate on Maintaining Prices

March 9 to 10 will be the critical window period for this round of price increases, during which major producers have collectively and significantly raised factory prices:

Hebei Xinja Jiu Yuan: On March 10, the factory price surged by 400 CNY/ton to 6,100 CNY/ton, with a price increase of 7%, signaling a clear tightening in the spot market supply and demand.

Shandong Shuntian: Synchronously increased by 400 CNY/ton to 6,000 CNY/ton, a price increase of about 7.14%, reflecting a significant boost in the company's pricing confidence. Hualu Hengsheng: Quoted at 5,600 CNY/ton on March 9, an increase of 100 CNY/ton; further increased to 5,900 CNY/ton on March 10, with a cumulative increase of 200 yuan over two days.

Sichuan Meifeng and Holitech Technology, among other Chinese companies, have also significantly increased their prices by 250-400 CNY per ton.

This large-scale and significant price increase, coupled with the actual shutdown of some facilities, has led to a short-term supply shortage in the market. As a result, production companies are facing no pressure to sell, and a sentiment of holding back from selling has emerged. Most companies have suspended taking orders.

4. Demand Side:

After the holiday, the downstream sheet and molded-plastic industries have fully resumed work, creating robust demand that provides solid support. According to an analysis by China Board Materials Network, prices of chemical raw materials such as melamine have risen sharply. Coupled with the resumption of construction activities at numerous sites across the country, demand for construction formwork has surged, continuously pushing up end-consumer sales prices. Although demand is not the primary driver behind this price increase, it has effectively served as a “pass” that allows cost pressures to be smoothly passed down the supply chain.

III. Summary

Currently, the benefits of a tightening supply have dominated market sentiment. After the "buying on rising" sentiment was ignited, the market is experiencing a strong upward trend. Most companies have suspended taking orders, waiting for prices to rise further. The increase in raw material costs and the strong intention of production enterprises to maintain prices are expected to continue supporting the short-term market in China.

Short-term outlook: The melamine market is expected to remain firm for the remainder of this week, and there is still a possibility that prices could continue to rise. However, it’s important to note that after price increases, the downstream sector’s actual demand capacity remains to be seen, and some high-priced transactions may still leave room for negotiation. Investors should closely monitor the progress of restarts at shutdown facilities, trends in raw material prices, and the actual situation of downstream demand.