June 23 news
I. Price Trend: Rising sharply then falling back, trading in a narrow range at lower levels
This week, the spot price of melamine showed a pattern of initial stability followed by a decline, and then stabilization at a low level. As of June 23, the benchmark price of melamine was 6,075.00 CNY/ton, which is a decrease of 0.82% compared to the beginning of the month (6,125.00 CNY/ton) in China.
The price line has been running closely below the 10-day and 20-day moving averages. Since June 16, the spot price has started to decline, gradually dropping from 6,080 CNY/ton to 6,075 CNY/ton. After June 18, the market trend stabilized completely, remaining steady at 6,075 CNY/ton for five consecutive days. The maximum price decrease within the week was only 0.12%, and trading activity at the end of the period has entered a narrow range of consolidation.
From the moving average system, the 10-day moving average (red line) continues to be below the 20-day moving average (cyan line). Both moving averages are synchronously tilting downward, and the difference (10-day moving average - 20-day moving average) has been in the negative range for a long time, which is typical of a negative trend. The short-term difference is continuously narrowing, indicating a signal of a decreasing negative trend, meaning that the previous downward momentum is gradually weakening, the speed of price decline is slowing down, and the short-term downward space is limited.
II. Cyclical Position Indicator: The entire cycle is in the low-price range
According to the spot market location data, as of June 22, the spot price of melamine in China has been marked as low for the entire year, with the full cycle price range at the bottom. The current spot price is 6,075 CNY per ton, a cumulative decrease of 0.82% from 6,125 CNY per ton at the beginning of June. The price has fallen to the recent cost support level, significantly compressing the space for further deep correction, which is the core support logic for the market to stabilize and move sideways this week.
Three, Analysis of Upstream and Downstream Cost Offsetting
On the raw-material side, urea has begun to show an inverse price trend. As of June 23, the benchmark price of urea stood at 1,838.75 CNY per ton, up 1.03% from the early-June level of 1,820 CNY per ton. Although raw-material costs have risen slightly, this has provided some floor support for melamine prices. However, demand in downstream industries such as board manufacturing and impregnated paper remains in the traditional off-season, with weak spot demand from end-users. Consequently, manufacturers face persistent pressure to sell their products, making it difficult for cost support to translate into upward price momentum. Caught in a tug-of-war between bullish and bearish forces, the market can only maintain a stalemate at low prices.
4. Trend Signals and Market Forecast
1. The average difference remains negative but the gap is continuously narrowing (decreasing in the negative direction), with the downward momentum continuously weakening. Coupled with the support of low prices throughout the cycle, there is a high probability that the spot price will continue to fluctuate narrowly around 6075 CNY/ton in the short term, and the significant downward trend has basically ended. 2. The core suppression is the weak demand during the off-season for downstream sectors. Even if the cost of urea slightly increases, traders and factories lack the confidence to actively raise prices, and there is a lack of sustained upward driving force in the short term.
3. Subsequently, the difference between the moving averages needs to be tracked. If the 10-day moving average breaks above the 20-day moving average and the difference changes from negative to positive, it will signal the start of a price rebound; if the negative difference widens again, then the period of consolidation at low levels will be extended.
V. Summary
This Wednesday, the spot price of melamine in China slightly declined due to the off-season demand. It received some cost support from a small increase in the raw material urea. Additionally, with the prices at a low level for the entire cycle and the negative divergence of the moving average narrowing, signaling a halt in the decline, the market has transitioned from a one-sided downtrend to a phase of narrow-range consolidation at low levels. The forces of bulls and bears are relatively balanced, making it unlikely for significant fluctuations in the short term. Overall, the market is mainly in a state of cautious observation and stalemate.
