Insufficient demand has indeed led to downward pressure on the melamine market. The following is a detailed analysis of this phenomenon:
| Melamine |
1、 Market situation
Price decline: Affected by sluggish demand, the market price of melamine continues to decline. For example, in the first half of 2024, the average price of melamine in the domestic market was about 6587 yuan/ton, a year-on-year decrease of 5.98%. As of November 19th, the benchmark price of melamine in Shengyi Society was 6462.50 yuan/ton, a decrease of -3.36% compared to the beginning of this month (6687.50 yuan/ton).
Oversupply: Despite sluggish demand, the production capacity of melamine is constantly increasing. The gradual release of new production capacity by enterprises has led to a significant increase in market supply. At the same time, some melamine plants that were previously shut down due to maintenance have resumed production, further exacerbating the supply pressure on the market.
Inventory backlog: With the increase in supply and insufficient demand, some companies’ inventory begins to accumulate. This not only increases the operating costs of the enterprise, but may also have adverse effects on subsequent production and sales.
2、 Cause analysis
Upstream price decline: The domestic urea market continues to operate steadily with a weak trend, with some manufacturers experiencing a slight decrease in quotes, and the overall market transaction center shifting downwards. The early parking devices have resumed production one after another, and the market supply of goods continues to be loose. However, there is still no significant improvement in demand. Most enterprises have high inventory fluctuations, and price reductions are the main way to attract orders. Currently, the market lacks strong positive support. As of November 19th, the benchmark price of urea in Shengyi Society was 1983.75 yuan/ton, a decrease of -9.62% compared to the beginning of this month (2195.00 yuan/ton).
Insufficient downstream demand: Downstream industries associated with melamine, such as sheet metal and impregnation, have seen a decrease in operating load, resulting in an overall shortage of demand for melamine. The market demand of these downstream industries is an important support for the melamine market, but their insufficient production directly weakens the market demand.
The real estate industry is sluggish: The real estate industry is one of the important application areas of melamine. However, in recent years, the real estate industry has remained sluggish, with new construction areas and development investments continuing to decline, resulting in a significant decrease in demand for melamine.
3、 Future prospects
Adjustment of supply and demand relationship: With the gradual release of new production capacity and the gradual recovery of downstream demand, the supply and demand relationship of the melamine market is expected to be adjusted in the future. However, in the short term, the market may still face pressure from oversupply.
Low price operation: Affected by the increase in supply and weak demand, the market price of melamine is expected to continue to operate at a low level. The specific price trend still needs to be judged based on market dynamics and changes in supply and demand relationships.
In summary, insufficient demand is the main reason for the downward pressure on the melamine market. In the future, with the adjustment of market supply and demand and the low operation of prices, enterprises need to adopt active response strategies to cope with market challenges.
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