Low Levels Across the Entire Cycle + Widening Negative Deviation—Melamine Short-Term Market Weakens

May 28 news

I. Price Trends: Monthly price decrease exceeds 10%, with prices fluctuating at low levels

This week, the melamine market in China continued the downward trend that began in mid-April. According to the data, the benchmark price on May 27 fell to 6137.50 CNY/ton, a slight decrease of 0.20% from the previous day. Compared to the price of 6875.00 CNY/ton at the beginning of the month, the price decrease within the month reached 10.73%. The current price has fallen back to a relatively low range over the past year, and the market transaction focus continues to shift downward.

II. Technical Analysis of Xianhuotong: The mean deviation is widening negatively, confirming the bearish trend.

From a technical perspective, the market shows clear signs of weakness:

Moving Average Convergence Divergence (MACD) Indicator: The 10-day moving average (in red) continues to run below the 20-day moving average (in blue), and the “MACD” is showing a widening negative divergence. This indicates that short-term downward momentum is accelerating, and the market has yet to signal a bottoming-out trend; it remains in the process of probing for a bottom.

Price Position: Data shows that the current price is at a “low” position across all timeframes—from 10 days to one year. This indicates that the price has entered a value bottom zone, but it also reflects significant resistance to a rebound and a lack of market confidence.

III. Market Fundamentals:

Cost Side: The price of urea—the primary raw material for melamine—has recently shown a weak performance. Although some urea producers have attempted to raise their quotes, the overall industry index remains low and has failed to provide effective support. The decline in raw material costs has directly weakened melamine’s price floor, creating room for manufacturers to lower their prices.

Supply Side: Although some facilities in the industry are currently undergoing maintenance, which has somewhat alleviated supply pressure, this has not been enough to reverse the downward trend. The reason is that the reduction in supply due to maintenance has been offset by the dual negative impacts of falling costs and weak demand. The market has shifted from a "cost-driven rise" to a "cost-collapse fall," making the benefits of maintenance seem insignificant.

Demand Side: Demand from downstream industries such as board materials and melamine powder remains sluggish, with purchasing activities driven solely by immediate needs and a strong reluctance toward high-priced raw materials. Under the mentality of "buying when prices rise but not when they fall," downstream markets are characterized by a wait-and-see attitude, further suppressing the likelihood of price rebounds.

4. Outlook for the Future:

Overall, the melamine market in China is currently under dual pressures of "cost collapse and weak demand." Despite favorable supply-side maintenance, it is difficult to withstand the impact of declining costs. Technical indicators show that the downward momentum is still present, and it is expected that the market will continue to weaken and probe for a bottom in the short term. In the future, it will be important to closely monitor the trend of urea prices and whether downstream demand can recover with the stimulus of lower prices.