Sell Signal Alert! Melamine Drops Sharply to "Low Position" in 10 Days, Short-term Momentum Weakens

April 15 news

I. This Week’s Market Review:

This week, the melamine market in China continued to decline. As of April 14, the benchmark price was 9,150.00 CNY/ton, a decrease of 5.43% from the beginning of the week (9,675.00 CNY/ton). The overall price trended downward under pressure throughout the week, with a daily change rate of -3.43%. Market performance showed a strong wait-and-see attitude, low purchasing enthusiasm from downstream buyers, and increased supply-side pressure, leading to a continuous weakening of prices.

II. Core Driver Analysis:

Demand Side: The operating rates in downstream industries such as board and plastic are generally moderate, with raw material procurement mainly driven by essential inventory replenishment needs, resulting in insufficient demand support.

Supply Side: Production has resumed at some plants following the completion of maintenance, leading to an increase in market supply. Coupled with inventory pressure, this further puts downward pressure on prices.

Cost Side: The price fluctuation of upstream raw material urea has been relatively mild, providing limited cost support and failing to effectively boost melamine prices. As of April 15, the benchmark price of urea stood at 1,875.00 CNY per ton, up 0.54% from the beginning of this month (1,865.00 CNY per ton).

3. Technical Analysis of Spot Trading:

From the trend of the moving average:

The medium- and long-term moving averages (20-day, 30-day, and 60-day) are all diverging upward, and the short-term moving average (10-day) is trading above the longer-term moving averages, consistent with the characteristics of an uptrend, indicating that the medium- and long-term bullish outlook remains unchanged.

The latest price (9150 CNY/ton) has fallen below the 10-day moving average, and the 10-day moving average is turning downward. The short-term trend has shifted from rising to falling, entering a correction phase.

The moving averages have not shown entanglement or a death cross, indicating only a short-term pullback and no trend reversal signal has been formed.

Trade Signal Validation:

Key Indicator (Moving Average Crossover): The 10-day moving average has not yet effectively crossed below the 20-day moving average. The price has only briefly fallen below the 10-day MA, but this does not yet constitute a clear sell signal—it merely serves as a short-term pullback warning.

Auxiliary Indicator (Positional Characteristics): The 10-day position is at a low level, while the 20- and 30-day positions are at high levels—this indicates a “high-level pullback with short-term oversold conditions.” It’s neither suitable for chasing downward trends nor does it meet the criteria for bottom-fishing.

4. Forecast for Future Market Trends:

In the short term, the price of melamine has fallen below the 10-day moving average, indicating oversold conditions over a 10-day period and creating demand for a technical rebound. However, the 20- and 30-day moving averages remain at high levels, suggesting insufficient market willingness to chase higher prices and limiting the upside potential for any rebound. If the price fails to quickly recover to around 9,475 CNY/ton—the level of the 10-day moving average—prices could continue to decline further. Support levels below this are seen at 9,000 CNY/ton, with a stronger support level near 8,800 CNY/ton (around the 20-day moving average).

In the medium term, the market will mainly experience high-level fluctuations, with the trend yet to be confirmed. The medium- and long-term moving averages are still in a bullish formation, and the overall upward trend has not been broken. There is still momentum for a rebound in the medium term. If the price stabilizes above the 20-day moving average after a pullback, it will meet the buying conditions and is expected to resume the uptrend. If it effectively breaks below the 30-day moving average (about 8600 CNY/ton), the trend will reverse, and it will enter a downward channel.