Melamine Market Stabilizes Temporarily; a Definitive Bottom in the Short Term Has Basically Been Established

June 1st, according to the news,

I. This Week’s Market Performance

This week, the melamine market in China as a whole showed a "weak stabilization and narrow fluctuation" trend. According to the monitoring data, after a continuous decline in prices earlier, the market entered a sideways consolidation phase this week, with both bulls and bears in a weak equilibrium.

II. Price Trend Analysis

According to the price trend chart and data table:

At the beginning of the week (May 25), the price was 6,150 CNY/ton, then it slightly declined to 6,137.5 CNY/ton (May 27-28), and finally closed at 6,125.00 CNY/ton (May 31). The fluctuation within the week was very small, with the maximum single-day price decrease being only 0.20%. In the latter half of the week (May 29-31), the price remained completely flat, with a daily change rate of 0.00%. This indicates that market selling pressure has weakened, but buying remains cautious, and light trading volume has led to a lack of direction in prices.

3. Technical Analysis of Spot Trading

Using spot market analysis tools, decompose the technical indicators for this week:

1. Key Indicator: Difference (10-day Moving Average - 20-day Moving Average)

The 10-day moving average (red line), which represents the short-term trend, has consistently been below the 20-day moving average (cyan line), which represents the medium-term trend. Currently, it is in a "negative zone." Although the price stopped falling this week, the 10-day moving average did not cross above the 20-day moving average, indicating that the downward trend has not fundamentally reversed, and the market is still in a recovery phase after being dominated by bears.

This week, the distance between the 10-day moving average and the 20-day moving average (absolute value of the difference) remained relatively stable, without showing a significant "negative expansion" or noticeable "negative contraction." This means that the downward momentum has significantly weakened, and the Chinese market has entered a phase of resistance consolidation, accumulating strength while waiting for a directional choice.

2. Auxiliary Indicator: Price Positions in 5 Levels Within the Cycle

As of May 31, the price of melamine has been at a "low" level throughout the entire one-year period. A "full-cycle low" is a very clear bottom signal. This indicates that the current price of 6125 CNY/ton has touched the cost support line or historical valuation trough over a longer cycle in China. The downward space has been extremely compressed, and the possibility of further significant declines is low, indicating a higher safety margin.

4. Comprehensive Conclusion and Future Outlook

Conclusion: This week, the melamine market in China showed a "bottom-grinding" characteristic. Although the moving average system still indicates a bearish trend (the 10-day moving average is below the 20-day moving average), limiting the rebound, the extreme stability of prices and the "low-level" label throughout the cycle confirm that the current period is already in a stage of bottoming out.

Outlook: The market is expected to remain broadly stable next week. With no major positive catalysts in sight, prices will likely fluctuate narrowly within the range of 6,100–6,150 CNY/ton. It’s crucial to closely monitor for the emergence of a “moving average crossover” signal. Only when the 10-day moving average begins to turn upward and approaches the 20-day moving average—marking the critical point where the difference between the two averages shifts from negative to positive—will it serve as a definitive signal of an impending reversal and upward trend.