Melamine Prices Surge Over 10% as Upstream and Downstream Competition Intensifies in China

March 17 news

This week, the melamine market in China continued its strong upward trend, with prices significantly rising due to the combined effects of cost increases, tighter supply, and companies holding firm on prices. Here is a detailed analysis of this week's market trends:

I. Price Trends:

This week, the market price of melamine has shown a more significant increase compared to last week. According to the data, on March 17, the benchmark price of melamine was reported at 6,625.00 CNY/ton, which is an increase of 325 yuan from 6,300.00 CNY/ton on Monday (March 10), with a weekly price increase of 5.16%. Compared to the beginning of the month (March 1) when it was 5,970.00 CNY/ton, the cumulative increase is 655 yuan, with the overall price increase expanding to 10.97%. This price level has also set a new high for the recent market in China.

From the daily data, prices showed a continuous upward trend this week. On March 10, the price was reported at 6300.00 CNY/ton. It then quickly broke through the range of 6337 to 6446 yuan between the 11th and 13th. By the weekend, it surged above 6550 yuan, and today it reached a high of 6625 yuan. The steep rise in prices clearly reflects the strong market situation in China.

II. Resonance Among Cost, Supply, and Demand

1. Cost Side: This week, the sharp rise in upstream raw material prices has been the most critical driver behind the increase in melamine prices. Recently, geopolitical developments in the Strait of Hormuz have disrupted imports of methanol—the key raw material—leading to a single-day price surge of over 7% in China’s methanol market. This, in turn, has directly pushed up the production costs of urea. As urea serves as a direct feedstock for melamine, upward pressure on its price is clearly transmitted along the “methanol → urea → melamine” industrial chain. Meanwhile, the volatile fluctuations in international crude oil prices have also provided strong cost support and risk premiums across the entire chemical industry chain.

2. Supply Side: While costs are rising, the supply side has not eased. Although there were fluctuations in the overall industry operating rate this week, it remained at a relatively low level, and frequent start-stop of facilities led to limited spot market circulation. Data shows that on March 16, China's melamine capacity utilization rate was 56.99%, a slight increase from previous levels. However, while facilities in Henan Dahan, Henan Tianqing, and Shandong Helite resumed production over the weekend, large facilities in Sichuan Jinxiang and Shanxi Fengxi Linyi shut down. This "ebb and flow" of shutdowns and restarts makes it difficult for the market supply to form a stable expectation, instead exacerbating the temporary tight situation.

In this context, the sentiment among Chinese production enterprises to maintain or even hold back prices has become increasingly strong. Entering this week, major manufacturers continue to raise prices frequently.

March 16-17, the factory price of Chongqing Jianfeng in China increased continuously, with a cumulative rise of 400 CNY/ton to 6400 CNY/ton.

March 17, Shanxi Fengxi factory price increased by 300 CNY/ton to 6,700 CNY/ton, a price that is significantly higher than the market benchmark, indicating the company's strong confidence in the future market.

On the same day, Sichuan Meifeng's factory price also increased by 250 CNY/ton to 6200 CNY/ton. It is worth noting that the plant's 50,000-ton facility is currently shut down, further reducing market supply.

3. Demand Side: After the holiday, the downstream panel and molding industries have fully resumed operations, forming a rigid demand support. A large number of construction sites across China have started work, driving the demand for building templates and providing a fundamental boost to the demand for melamine. Although demand was not the primary driver in this round of price increases, it provided a foundation for the sustained rise in prices, allowing cost pressures to be smoothly passed on to the downstream sector.

III. Outlook for the Future Market

Looking ahead to next week, it is expected that the melamine market will maintain a strong and stable trend. On the supply side, domestic companies generally have no inventory pressure, and with some facilities still shut down, manufacturers' willingness to keep prices high is unlikely to fade in the short term. In terms of costs, the raw material urea market is expected to remain strong, supported by spring farming demand, and will continue to provide bottom support for melamine.

However, market risk is also accumulating. As prices continue to rise, the willingness of downstream enterprises to chase higher prices may weaken, and their ability to absorb high-priced raw materials remains to be observed. Some high-priced transactions may have room for negotiation. It is recommended that market participants closely monitor the trend of raw material prices, the progress of restarting suspended facilities, and the actual order intake by downstream sectors in China.