SunSirs: Supply Increased, and Melamine Market Ran Weakly
November 06 2024 14:29:01 SunSirs (John)
This week, the melamine market has indeed shown a weak trend, with an increase in supply being an important factor leading to market weakness. As of November 6th, the benchmark price of melamine in SunSirs was 6,675.00 RMB/ton, a decrease of 0.19% compared to the beginning of this month (6,687.50 RMB/ton).
The following is a detailed analysis of the current operation of the melamine market:
Supply increased
New production capacity deployment: Recently, multiple sets of melamine plants have been put into operation or planned to be put into operation, such as Xinjiang Yankuang, Henan Jinkong Tianqing, Shaanxi Longhua and other enterprises' new production capacity will gradually be released, leading to a significant increase in market supply.
Restoration of Maintenance Equipment: Some melamine units that were previously shut down due to maintenance have resumed production, further increasing market supply.
Demand was weak
Insufficient production in downstream industries: Downstream industries related to melamine, such as sheet metal and impregnation, have seen a decrease in production load, resulting in an overall shortage of demand for melamine.
Procurement demand reduced: Due to increased supply and insufficient demand, downstream manufacturers and traders have reduced their procurement demand for melamine, further exacerbating the weak market situation.
Market price trend
Price declined: Affected by the increase in supply and weak demand, the market price of melamine is showing a downward trend. Although prices have fluctuated during certain periods, overall, the market price center is gradually shifting downwards.
Decline was limited: Due to factors such as raw material costs, the decline in melamine market prices is relatively limited. However, against the backdrop of oversupply and insufficient demand, market prices still face significant downward pressure.
Trend of raw material prices
The main reasons for the decrease in urea prices this week include increased supply, reduced demand, lower costs, pessimistic market expectations, and policy impacts.
The main raw materials for producing urea are coal and natural gas. In the first half of 2024, domestic coal supply was abundant, downstream daily consumption recovered slowly, coal inventories remained high, and the center of gravity of coal prices continued to shift downwards, resulting in a decrease in the production cost of urea and providing some space for the decline of urea prices. As of November 6th, the benchmark price of urea in SunSirs was 2,181.25 RMB/ton, a decrease of 0.63% compared to the beginning of this month (2,195.00 RMB/ton).
Market outlook
Prominent supply-demand contradiction: With the gradual release of new production capacity and the sustained weakness of downstream industry demand, the supply-demand contradiction in the melamine market will become even more prominent.
Low price operation: It is expected that the market price of melamine will remain low for a period of time in the future. However, the specific price trend still needs to be judged based on market dynamics and changes in supply and demand relationships.
In summary, the main reasons for the weak operation of the melamine market this week are the increase in supply and weak demand. Against the backdrop of oversupply and insufficient demand, market prices are showing a downward trend. The future market trend will be influenced by various factors, including the deployment of new production capacity, the recovery of downstream industry demand, and changes in raw material costs. Therefore, enterprises need to closely monitor market dynamics and changes in supply and demand relationships in order to flexibly respond to market challenges and seek development opportunities.
If you have any enquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.
