July 1st News
I. This Week’s Spot Market Trends
This week, the melamine benchmark price showed a weak fluctuation overall. From June 24 to 29, the price remained stable at 6062.5 CNY/ton, with a narrow range of sideways oscillation and no significant changes in increase or decrease; until June 30, when the market saw a breakout decline, with a single-day price reduction of 12.5 CNY/ton, a daily price decrease of 0.21%, and the spot benchmark price falling to 6050 CNY/ton, setting a new low for the period.
From a monthly perspective, as of July 1, the benchmark price of melamine was 6050.00 CNY/ton, a decrease of 1.22% compared to the beginning of last month (6125.00 CNY/ton). The upstream raw material urea also weakened, with the benchmark price of urea on July 1 at 1813.75 CNY/ton, a month-on-month decline of 0.34%. The continuous weakening of cost support has set the stage for the weak performance of melamine this week.
SpotCom Moving Average Pattern
This week, the 10-day moving average (red line) and the 20-day moving average (cyan line) both moved downward at a steady pace throughout. The two moving averages maintained a downward slope, with the 10-day moving average consistently below the 20-day moving average. The difference (10-day moving average - 20-day moving average) has been negative for a long time. There are no signs of the two medium- to long-term moving averages turning or converging, and there has been no bullish crossover signal where the difference turns from negative to positive. The overall trend in the Chinese market remains bearish, and the bulls lack technical support from the moving averages.
II. Five Price Levels of the Cycle
Combining the spot market conditions and auxiliary indicators based on the top five price levels, during all trading days from June 24 to June 30 this week, melamine has been in a low-range pattern throughout the entire period, indicating that the current price is now within a temporary bottom range. However, “low level does not equate to stabilization.” Under the dual influence of continuously widening negative deviations in the mean difference indicator and the strengthening bearish trend, the low level merely signifies that the downward space is narrowing—not that effective support for halting the decline has been established.
3. Fundamentals
1. Cost Side: Upstream urea prices have also weakened simultaneously, leading to a slight decline in urea prices this month. As a result, the marginal cost of melamine production has fallen, weakening cost support from producers and reducing resistance to lowering ex-factory quotes. The raw material side is unable to provide upward price momentum and continues to exert strong downward pressure on spot prices.
2. Supply and Demand: The spot price remained stable in the first half of this week, mainly due to the weak balance in the market supply and demand, with stable factory inventory and steady rigid demand procurement for downstream products such as sheets and coatings, without any concentrated large orders. In the latter half of the week, the price broke down, reflecting the continuous weakening of terminal demand. Downstream buyers became more cautious, slowing down their purchasing pace. Manufacturers faced slightly increased pressure to sell, and were forced to lower their quotes to promote transactions.
4. Forecast of Future Market Trends
Short-term trend: The current mean deviation indicator has entered a negative widening range, signaling accelerating downward momentum. Meanwhile, although the price remains at a low level across all timeframes, there are no reversal signals—such as a turning of moving averages or convergence of mean deviations—that would suggest a halt to the decline. As a result, the short-term weak pattern in melamine prices is unlikely to reverse, and there still exists some room for minor further declines.
