August 3 news
This week, the melamine market in China showed a strong performance, with the price steadily increasing. As of August 3rd, the benchmark price for melamine was reported at 6,212.50 CNY per ton, up 0.40% from the beginning of the month. Against the backdrop of stable urea prices, melamine has demonstrated an independent upward trend driven by its own supply and demand dynamics, with technical indicators suggesting that the upward momentum is strengthening.
I. Spot Market Trends: Stepped Upward Movement, Firmly Holding Short-Term Highs
From the recent price trends, the melamine market in China has shown a clear "two steps forward, one step back" or "step-by-step" increase characteristic.
Price Performance: At the beginning of the week (July 27), the price stood at 6,125.00 CNY/ton. Subsequently, it experienced slight fluctuations and consolidation before breaking through the 6,187.50 CNY/ton mark on July 31 and further climbing to a high of 6,212.50 CNY/ton in early August. Although the change rate on August 2 was 0.00%, the overall upward trend in the price center of gravity remained unchanged.
Raw Material Comparison: The benchmark price of upstream urea stands at 1,757.50 CNY per ton, unchanged from the beginning of this month. The rise in melamine prices is not driven by rising costs but rather stems from tighter industry supply or improved demand, which has helped restore profit margins for the product.
The current price has fully entered the "high" range for the past 10, 20, 30, and 60 days. It is worth noting that although it is at a high level in the short to medium term, in the long-term dimensions of 90 days and one year, the price is still in the "middle-low" and "low" ranges. This means that from a long-term perspective, the current price is still in the rebound stage after bottoming out, with significant room for growth in the long term.
II. Technical Analysis of Xianhuotong: Moving Averages in a Bullish Arrangement, Upward Momentum Accelerating
Based on the analysis of the spot commodity average difference index and moving average system, the current market in China is releasing positive bullish signals:
Moving Average Pattern: The 10-day moving average and the 20-day moving average both show a smooth upward trend. Particularly, the 10-day moving average has a steeper slope and remains above the 20-day moving average, forming a standard "bullish alignment."
Divergence Signal: Currently, the 10-day moving average is above the 20-day moving average, and the gap between the two lines is gradually widening. According to the underlying principle, this indicates that the upward trend is accelerating, buying pressure is stronger than selling pressure, market sentiment is bullish, and there is a high probability that prices will continue their upward momentum in the short term.
Although the trend is positive, prices have reached a "high level" in the short term (10-60 days), which typically means that there are substantial short-term profits. If trading volume does not continue to increase, one should be cautious of the need for high-level consolidation and digestion.
Three, Supply and Demand Dynamics and Future Outlook
The core logic of the current melamine market in China lies in "supply tightness supporting price increases."
Supply Side: Partial plant maintenance or load reduction has led to a decrease in the supply of goods in the market. Manufacturers have a strong desire to maintain prices, and there is relatively low inventory pressure. These factors are the main drivers of the price increase.
Demand Side: The downstream board and compound fertilizer industries remain relatively accepting of higher-priced raw materials, and rigid demand procurement continues to stay stable. Coupled with the contraction on the supply side, these factors are jointly driving up market prices.
Outlook for the Future:
In the short term, the melamine market in China is expected to continue a strong and volatile trend. The technical signal of "positive expansion" supports the price in testing the upper resistance level. However, as the price enters the short-term "high" zone and moves away from the long-term moving average, the market may face a technical correction or consolidation at any time to repair the indicators. It is recommended to closely monitor changes in the manufacturers' operating rates and the purchasing pace of downstream buyers. If there are signs of increased volume without a corresponding price increase, attention should be paid to the risk of a correction.
