SunSirs: Decline Slows! Melamine Enters a Volatile Bottom-Building Phase

Price Review: Retreat from Highs, Narrow-Range Fluctuation

This week, the price of premium industrial-grade melamine in East China fluctuated within a narrow range, with the weekly price band falling between 6,850 and 6,887.5 RMB/ton. As of May 14, the benchmark price reported by SunSirs stood at 6,887.5 RMB/ton—a marginal increase of 0.18% compared to the beginning of the month (6,875 RMB/ton)—reflecting an overall market pattern characterized by "stabilization at high levels and narrow-range oscillation."

From a long-term perspective, since mid-February, melamine prices have undergone a complete market cycle characterized by a "unilateral upward trend followed by a sharp correction": from mid-February to early April, prices rose continuously from approximately 5,700 RMB/ton, peaking at an annual high of 9,675 RMB/ton. Following early April, prices retreated rapidly; as of this week, they have fallen back to the lower-to-middle range of the year. Current prices represent a decline of approximately 28.8% from the annual high, yet still retain a 28.1% gain over the annual low (5,375 RMB/ton), positioning them at a "lower-to-middle" level.

Market Logic: A Fragile Equilibrium Amidst the Interplay of Supply and Demand

1. Supply Side: During the earlier phase of surging prices, industry operating rates rose—with some facilities running at full capacity—leading to an increase in market supply. This was compounded by the sequential delivery of orders placed at previously high price levels, resulting in an expanded volume of circulating goods in the market and exerting downward pressure on prices.

2. Cost Side: Prices for upstream urea and liquid ammonia have trended weakly in recent days, resulting in diminished cost support. Consequently, some enterprises have slightly lowered their quoted prices in line with falling costs; however, due to a backlog of prior orders, manufacturers remain inclined to hold prices firm, thereby limiting the potential for any significant price decline. As of May 14, the benchmark price for urea—as tracked by SunSirs—stood at 1,837.50 RMB/ton, representing a 2% decrease compared to the beginning of the month (1,875.00 RMB/ton).

3. Demand Side: Downstream sectors—such as sheet materials, coatings, and molding plastics—continue to exhibit only essential demand. End-market orders show no significant growth, and purchasing activity remains predominantly on a "buy-as-needed" basis, lacking the impetus for large-scale inventory stockpiling. Furthermore, some downstream enterprises are still working through previously acquired, high-priced raw material inventories; consequently, their acceptance of current price levels remains moderate, resulting in a subdued trading atmosphere that struggles to generate sustained upward price momentum.

Market Outlook:

Overall, the melamine market is currently in a phase characterized by "decelerating decline and narrow-range fluctuation." In the short term, prices are expected to oscillate within the 6,800–7,000 RMB/ton range as they attempt to establish a market bottom. Prices have already retreated to the lower-to-mid range for the year, and as they approach manufacturers' cost lines, the willingness to hold prices firm has strengthened. Furthermore, the 10-day moving average has stabilized, indicating insufficient momentum for further short-term declines.

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