July 16th, according to reports
I. Price Trends: After a period of sideways fluctuations, prices have stabilized with an overall downward shift in the center of gravity.
From the data, the melamine benchmark price in China this week (July 9-July 15) showed a trend of "initial minor fluctuations, followed by stabilization." As of July 16, the melamine benchmark price was 6012.50 CNY/ton, a decrease of 0.62% compared to the beginning of the month (6050.00 CNY/ton).
From a cyclical perspective, the 10-day, 20-day, 30-day, 60-day, 90-day, and one-year cycle positions are all marked as "low," indicating that the current price is at the lowest point in nearly a year. There is no price support advantage for both long-term and short-term positions, and the market's bullish sentiment is extremely weak.
II. Spot Futures Moving Average Perspective: Short- and long-term moving averages are both trending downward simultaneously, indicating a strong bearish market sentiment.
In the chart, the short-term 10-day moving average (red line) and the medium-term 20-day moving average (blue line) are both in a continuous downward trend. The 10-day moving average has been consistently below the 20-day moving average, and the difference between the 10-day and 20-day moving averages has remained negative. This confirms a standard bearish pattern.
1. Lack of Turning Point Signal: Throughout this week’s cycle, the moving average difference has consistently remained negative without ever turning positive. There is no bullish signal indicating that the 10-day moving average has crossed above the 20-day moving average; hence, the market lacks any technical foundation for a bullish rebound.
2. Clear downward pressure: The two moving averages are both trending downward in tandem, forming a series of overlapping resistance zones. The spot price consistently hovers below these moving averages; even if it temporarily halts its decline and stabilizes, it remains powerless to break through the upward pressure exerted by the moving averages.
3. Lack of upward momentum: In recent days, market prices have been stagnant with no signs of rebound, reflecting that the downstream sector is only maintaining minimal and sporadic purchases. Intermediaries show low willingness to push for price increases, and there is currently no additional capital entering the market to support the prices.
Three, the cost-side support has weakened, and raw materials continue to drag down the market.
The core raw material for melamine—urea—is also weakening simultaneously. This week, the benchmark price of urea stands at 1,770 CNY per ton, down 2.41% from the beginning of the month’s price of 1,813.75 CNY per ton. Cost support from the raw material side continues to loosen:
Urea is in the off-season for agricultural demand, with factory inventories accumulating and shipping under pressure. Urea prices have been declining, directly compressing the cost bottom of melamine.
2. The decline in raw material prices has weakened the industry's confidence in maintaining prices, making it difficult for upstream melamine producers in China to use cost factors as a reason for price increases. Even with prices at low levels, there is no cost-driven support for a rebound.
4. Interpretation of Supply and Demand Fundamentals
Supply Side
Industry startup rates remain stable, with manufacturers showing no significant inventory reduction efforts, and the market supply of spot goods remains ample. The decline in urea prices has led to a slight drop in production costs for some plants. Enterprises are neither conducting concentrated maintenance shutdowns to reduce output nor proactively limiting supply to maintain prices; the abundant supply is thus putting downward pressure on price increases.
Demand Side
Downstream industries for boards and adhesives have entered the traditional off-season characterized by high temperatures, resulting in fewer orders at the home decoration and building materials end markets. Downstream factories are procuring materials on an as-needed basis, with no significant surge in centralized restocking activities. Traders are mostly adopting a wait-and-see approach, showing little willingness to purchase goods at low prices and stock up. Transactions remain at a small, demand-driven level, with no positive signs of increased demand.
5. Future Market Trend Prediction
1. Short Term (Next Week): The technical trend of moving averages remains bearish, with all timeframes currently at low levels. Coupled with weak urea prices, melamine is highly likely to continue trading in a narrow range at lower levels. A significant price rebound will be challenging, and the price is expected to mostly oscillate within the 6,010–6,030 CNY/ton range.
2. Mid-term Turning Point: For the market trend to reverse its weakness, one of two signals needs to emerge: First, the average difference turning from negative to positive (the 10-day moving average crossing above the 20-day moving average), forming a technical signal for a rise; Second, a recovery in orders for the downstream sheet industry and a rebound in urea raw material prices, with simultaneous bullish developments on both the supply and demand sides.
Six, Summary
This week, melamine prices in China have been generally stable but slightly weak, with a small decline followed by a period of low-level consolidation. The technical moving averages continue to exert downward pressure, and the raw material urea is also weakening. Downstream demand is weak due to the off-season, and the market sentiment is clearly bearish. Currently, the market is only maintained by rigid demand, lacking any positive factors that could drive prices up. The short-term market trend is expected to remain weak. It is necessary to continuously monitor the trend of urea prices and the resumption of downstream panel production, waiting for the dual turning points in moving averages and supply and demand.
