The market continues to decline after stabilizing with partial small rebound (July 2022)

1.This month’s market review

• Analysis of domestic melamine price trend

In July, China’s melamine market continued to decline after the overall stable operation, a small rebound. The price of melamine dropped rapidly in the middle and early part of this month. On the one hand, the downstream traditional consumption season continued to advance, and the supply of goods was limited. On the other hand, because the raw material urea market opened the mode of price reduction, and the decrease is obvious, the production cost line of melamine is reduced, which has a certain negative impact on the market. Both aspects aggravate the pessimistic attitude of the industry towards the future market, leading to the strengthening of the positive shipping willingness of manufacturers, and the transaction gradually tends to loosen, but the downstream more buy up than buy down, the purchase willingness is weak, the transaction can be negotiated space further expanded, the center of gravity continues to move down. Late and fell to the middle, with slight rebound due to local storage maize fertilizer urea price, melamine to boost market confidence, and the price has dropped to a cost line, profit is damaged, manufacturer’s price will increase, in the low-end price moderate pick up after a single local exploratory, and downstream demand remains weak, supply capacity is limited, so high price clinch a deal.

2.Market analysis and forecast for next month

From the cost aspect, the late raw material urea market still has downward space, melamine production cost line continues to reduce, cost surface support will continue to weaken.

From the perspective of supply and demand, although there are still some enterprises in the late maintenance plan, and some discontinued devices will resume production, the average start-up load rate may continue to fluctuate around 60%, the overall level is not high, but the social inventory continues to exist, the overall market supply of goods is relatively abundant; On the demand side, the downstream market is still in the traditional low consumption season, and the order follow up is insufficient. The construction of downstream factories will hardly be substantially improved next month. Therefore, the consumption of raw materials is still slow, and the market will remain in the pattern of loose supply and demand in the later period.

The fundamentals of the negative news, that the domestic melamine market in August as a whole is still relatively weak operation, early next month some manufacturers or will continue to support the price operation, but the volume of transactions will be limited, later with the shipment again under pressure, the price is still possible loosening.

In addition, for the next three months forecast, in August the traditional consumption off-season continues to advance, then enter the “golden nine silver ten” traditional consumption season, part of the downstream factories or will improve, demand increase or will be on the market must boost, but later the supply and demand is expected to continue in a state of relatively loose, therefore fall or limited.