Melamine Market Dynamics Showcase Sporadic Behavior This Week
- 03-Jun-2022 3:15 PM
- Journalist: Xiang Hong
Shanghai, China- FOB Shanghai cost of Melamine in China oscillated around USD 1520/ton-USD 1530/ton on 27th May. Several Chinese Melamine producers complained about production-related challenges due to surges in electricity and fuel costs at the back of strong demand fundamentals. However, this week the prices relaxed due to fluctuations in feedstock Urea cost.
“Production cost in the Melamine manufacturing units operated at high rates, but the demand side was not improved significantly,” A trusted source in Shanghai has confirmed.
In terms of inventories, they remained on the softer end due to stockpiling of inventories among the ports, which affected the price trend.
Slower offtake of cargoes has been felt across some parts of Asia due to surging freight. However, in the international market, prices of feedstock Urea fell gradually with muted fundamentals. In addition, the conflict between Russia and Ukraine is not over yet, and the global supply chain shortage will continue to impact the global fertilizer market.
Let’s throw some light on the upstream market. The operating rate of coal enterprises fell significantly due to the supply crunch and surging demand from its downstream industries.
On 3rd June, the Chinese market was closed due to the Dragon Boat Festival, which slowed down the prices amid deterred demand from the downstream industries. China’s stock exchange and future commodity market remained closed and are expected to reopen on 6th June.
According to ChemAnalyst, there is still room for a further decline in domestic Melamine prices due to the utilization of existing inventories and feeble demand from downstream laminating and wood industries. However, in the long run, it is expected that a lack of supply caused by a reduction in some production units can increase the product prices. In the international market, deteriorating cost support and reduced purchasing activities can impact the prices of Melamine. Still, the downstream fertilizer and laminating industries are expected to operate cautiously according to the consumer’s needs.