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The largest melamine manufacturer in China, Guo Quanpu, Sales Manager of Zhongyang Dahua Group, Henan Liyang, analyzed that the current domestic melamine price plummets mainly due to three reasons:
First, the supply surged. In the past two years, some small melamine enterprises that were forced to shut down due to multiple factors such as rising costs, falling melamine product prices, and the government’s energy-saving emission reduction and environmental protection requirements have caused blowouts in the domestic melamine market from August to December last year. "Markets, melamine products profitable, these companies have once again put into production, increased market supply. At the same time, several sets of large-scale melamine units, such as Zhongyuan Dahua, Chuanhua Group, and Fujian Sanming Chemicals, which were shut down and overhauled, have also been completed and overhauled to achieve high-load production. In addition, Chongqing Jianfeng Chemical's 30,000-ton/year large-scale melamine plant was completed and put into production at the end of last year, and it has been in normal production in the recent days, eventually increasing the supply of domestic melamine products and lowering prices.
Second, the downstream demand has shrunk, and local supply exceeds demand, causing prices to fall. Before and after the Spring Festival, downstream users of melamine, including wood-based panels, paints, adhesives, etc., had to park for holidays, and the demand for melamine was significantly reduced. In addition, due to the recent continuous snowfall and cooling weather across the country, melamine transport was hindered and local supply exceeded supply. So the price plummeted.
Third, the price of raw material urea fell, driving the price of melamine down. On the one hand, on January 1 of this year, the General Administration of Customs increased the urea export tariff from 15% in the fourth quarter of last year to 30%, which contained a large amount of domestic urea and increased domestic urea stocks and market supply. On the other hand, in order to ensure the demand for spring ploughing fertilizer, the state has increased the investigation and enforcement of the implementation of the factory price limit policy for large-scale urea products, strictly limiting the ex-factory price of urea to no more than the price ceiling of 1,725 ​​yuan, and at the same time trying to solve the problem of urea production. In the course of business, many difficulties and problems are encountered to ensure the normal production of fertilizer companies. This series of policy measures eventually led to a rapid increase in domestic urea social inventories and a drop in prices. The current urea market price and ex-factory price have dropped by 100-150 yuan from the fourth quarter of last year. As the main raw material for melamine production, the price of urea fell and the market supply was sufficient, which greatly reduced the cost of melamine enterprises and weighed on the rise in the price of melamine.
As China has now become the world's largest melamine producer, consumer, and exporter, changes in China's melamine market will directly lead to changes in the international melamine market. Therefore, as the price of melamine in the domestic market has risen sharply since the previous period, the price of melamine in the market has dropped sharply. This has also triggered a sharp drop in international market prices. At present, the prices of major melamine consumer markets, such as Europe, the United States, Japan, are generally only around 12,000 yuan, which is more than 2,000 yuan less than the previous high price of over 14,000 yuan.
Looking from the market, due to the overall oversupply of melamine market at home and abroad, there is still room for further decline in the price of melamine in the face of weak downstream demand, adequate supply of domestic urea, limited prices due to policy constraints, and constraints on supply and demand. However, due to the increase in costs, the possibility of a deeper correction in the price of melamine is very small, and it is expected that strong support will be obtained at 9,000 yuan. Until the spring is warm, after the melamine downstream enterprises resume production, the melamine price will stop falling and stabilize, and regain the upward trend.
Three major factors hit the melamine market
Since the new year, the domestic price of melamine has changed sharply in the third quarter and fourth quarter of last year, and the market has taken a sharp turn for the worse. At present, the ex-factory price of high-end products has fallen to about 9,600 yuan (ton price, the same below), the ex-factory price of low-end products has dropped to 9,500 yuan, the ex-factory price of individual melamine is even lower than 9,500 yuan, and the FOB price of exports has dropped to 1470 US-1500. Dollars. The overall price has fallen by more than 2,000 yuan from the high of more than 12,000 yuan last year, with a monthly decline of more than 16%.