SunSirs: Supply and Demand Were Bearish, and the Melamine Market Was Running Weakly

Market Overview

Overall, the melamine market has shown weak fundamentals this week. According to the Commodity Market Analysis System of SunSirs, as of September 4th, the reference price of melamine was 6,750.00 RMB/ton, a decrease of 0.37% compared to September 1st (6,775.00 RMB/ton). Under the support of the decrease in production capacity utilization rate in northern industries, the probability of market price stability has increased due to the shutdown or maintenance plan of some facilities in the north.

As of September 4th, the devices undergoing maintenance include Sichuan Meifeng, Fengxi Linyi, and Shuntian. Jinhe and Hebei Jiuyuan maintenance equipment had restarted, and Shuntian equipment planned to restart in the near future; In addition, Helitai and Hebei Jiuyuan hadmaintenance plans in the near future. Overall, there was an expectation of a decrease in the utilization rate of melamine production capacity in the northern region, which supported manufacturers to raise prices.

Supply side

This week, domestic urea prices had continued to decline on a large scale, with most companies in mainstream regions such as Shandong, Hebei, Henan, and Anhui lowering their quotes by 30-40 RMB/ton. The ex factory price in Shandong had now fallen to 1,890 yuan, and mainstream regions had officially entered the market starting from 2018. The transaction price in Inner Mongolia had fallen below 1,800 RMB/ton, and the outsourcing price in Xinjiang was as low as 1,570-1,600 RMB/ton.

According to the Commodity Market Analysis System of SunSirs, as of September 5th, the benchmark price of SunSirs' urea was 2,151.00 RMB/ton, a decrease of 1.01% compared to the beginning of this month (2,173.00 RMB/ton).

In terms of demand

The melamine market had recently cooled down, and from the perspective of demand and raw materials, the market had weak positive news and insufficient demand follow-up. It is reported that some sheet metal factories have recently reduced their operating load, and considering that the supply of melamine will increase in the later maintenance and restoration of multiple factories, downstream manufacturers and traders have reduced their demand for melamine procurement.

Market outlook

Overall, the decrease in local production capacity utilization rate of melamine has provided support for the market, but there were insufficient benefits from demand and raw materials, and the overall market atmosphere was average. It is expected that the short-term market situation will be mainly stable and fluctuating, and in the long run, the market will lack guiding factors and may mainly follow the market trend.

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