This week, the overall price of melamine showed a stable trend, although there were slight fluctuations, there was no significant increase or decrease. As of December 17th, the benchmark price of melamine in Shengyi Society was 6405.00 yuan/ton, a decrease of -0.23% compared to the beginning of this month (6420.00 yuan/ton).
1、 Market situation
In the second half of 2024, the overall utilization rate of melamine production capacity was lower than that of the first half of the year, especially in mid October when the weekly production capacity rate of melamine fell to the low point of the second half of the year, which was the second low point of the year after the low point in mid July. Although there was a brief increase in capacity utilization due to the restoration of maintenance facilities, it subsequently declined again due to the shutdown and maintenance of some facilities.
2、 The impact of low capacity utilization on prices
1. Imbalance between supply and demand:
Low capacity utilization means insufficient production, but at the same time, due to sluggish downstream demand, this supply-demand imbalance has not led to price increases.
Especially in the sustained downturn of the real estate industry, downstream enterprises associated with it have low operating rates and overall insufficient demand, further exacerbating the supply-demand imbalance.
2. Intense market competition:
In the case of low capacity utilization, in order to maintain market share and sales revenue, enterprises may adopt a price reduction strategy to attract customers. This will lead to a further decline in market prices, making it difficult to recover.
3. Cost pressure:
Although low capacity utilization may reduce the allocation of fixed costs for enterprises, variable costs such as raw material costs and labor costs still exist. If companies are unable to cover these costs by raising prices, their profit margins will be further compressed.
3、 Prediction of Price Recovery Time
Due to the interweaving of various factors, it is difficult to accurately predict the rebound time of melamine prices. However, considerations can be made from the following aspects:
Improvement of supply-demand relationship: As downstream demand gradually recovers and new production capacity is effectively controlled, the supply-demand relationship will gradually become balanced, thereby driving up prices.
Rising raw material costs: If the price of raw material urea rises, it will increase the production cost of melamine, thereby providing support for market prices.
Increased export demand: With the recovery of the global economy and the increase in export demand, the export volume of melamine is expected to further increase, thereby driving up domestic prices.
4、 Future prospects
Fluctuations in raw material prices: There may still be some volatility in the future raw material urea market, which will have an impact on the production costs and prices of the melamine market. Enterprises need to closely monitor the dynamics of the raw material market and develop reasonable procurement and production plans.
Downstream demand changes: With the continuous development of the economy and the improvement of people’s living standards, the demand for melamine in downstream industries may show a new growth trend. Enterprises need to pay attention to changes in downstream demand and adjust their product structure and sales strategies in a timely manner.
Strengthening international cooperation: Enterprises should actively seek opportunities for international cooperation, expand overseas markets, and increase export volume. This can not only alleviate the supply and demand pressure in the domestic market, but also enhance the international visibility and brand influence of the enterprise.
In summary, low capacity utilization is one of the important factors currently restricting the recovery of melamine prices. In order to drive up prices and enhance the profitability of enterprises, they should closely monitor changes in downstream demand, optimize production capacity structure, and strengthen international cooperation.
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