Asian Melamine Market Enters October with Persistent Downward Pressure Amid Low Demand

Melamine prices remained under pressure during the first week of October 2024 across the Asia-Pacific region, driven by persistently bearish demand from key downstream sectors. The Melamine market struggled with an imbalance between ample supply and weak demand, as consumption from industries such as laminates, coatings, and wood-based panels failed to recover. Despite some temporary price stability in the preceding weeks, the overall sentiment remained cautious, reflecting subdued buying interest and limited procurement activities.

The downturn in demand for Melamine can be traced to several factors. In the APAC region, particularly in China, the upcoming holiday season has reduced operational activity across many industries. This has contributed to low levels of consumption, as downstream manufacturers have scaled back production in anticipation of reduced output during the holidays. Buyers across the region have remained hesitant to make significant purchases, with many opting to operate on a just-in-time inventory basis due to the weak market outlook.

Adding to the challenges, the broader construction sector has not exhibited the usual levels of demand, typically seen during the pre-holiday period. In China, construction activity slowed, and procurement of Melamine has remained sluggish, particularly for laminates and panels used in interior design and furniture. This downturn has been exacerbated by weak export demand, as global economic uncertainty continues to weigh on procurement trends from international buyers. While China had seen some increase in exports earlier in the year, this momentum has not been sufficient to offset the prevailing weakness in the domestic market.

Supply-side factors have also contributed to the weak market dynamics. Many Melamine producers across APAC have maintained steady output levels, leading to stable supply, while production cuts seen in prior months have been insufficient to balance the market. Additionally, urea (Feedstock of Melamine) prices, have failed to offer strong cost support, further amplifying the downward pressure on Melamine prices. This has discouraged traders and downstream buyers from building up inventories, further dragging down the market sentiment.

Looking ahead, Melamine prices are expected to remain under pressure throughout October. The peak holiday seasons in both China and India will likely lead to a further reduction in demand from domestic downstream industries. With manufacturers operating at reduced capacities and procurement activities limited to essential purchases, domestic demand is not anticipated to improve during this month. Unless there is a significant shift in market fundamentals or a sudden boost in construction or export demand, Melamine prices will likely continue their downward trajectory, reflecting a sluggish and oversupplied market.