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Persistent Melamine Price Drop Amidst Low Demand and High Supply
Persistent Melamine Price Drop Amidst Low Demand and High Supply

Persistent Melamine Price Drop Amidst Low Demand and High Supply

  • 30-May-2024 3:43 PM
  • Journalist: Sasha Fernandes

Texas (USA): The Melamine market in the USA has been witnessing a persistent decline in prices, largely driven by weak demand and economic uncertainties. Throughout late May 2024, traders have remained cautious, striving to maintain market stability amidst an ongoing downward trend. The price movement has been significantly influenced by the declining trend in the essential feedstock urea, which has adversely affected sales and profit margins. This scenario has compelled market participants to adjust their quotations downward in an attempt to stimulate sales. Furthermore, a sustained reduction in demand from importing nations, particularly in South America, has exacerbated the Melamine market dynamics, leading to further price reductions.

In the domestic market, fluctuations in demand for Melamine have been largely influenced by key downstream industries such as laminate, coating, and fertilizers, which have been responding to variable weather conditions across the country. Despite the ongoing trade uncertainties, export activities have remained relatively unaffected, showcasing the market's resilience. However, sufficient stockpiles of Melamine in the USA, supported by robust manufacturing operations, have contributed to the continued price decline. Market insights indicate that while US business activity showed signs of growth, the pace was slowed by weakened demand. Additionally, the downstream laminate industry in the USA has faced significant profitability challenges due to substantial capacity growth and inadequate support from feedstock urea and natural gas.

As of mid-May, the price of Melamine in the US domestic market continued to decline significantly due to weak cost support from feedstock urea and low demand in downstream laminate and other end-use industries. The lack of confidence in the construction market, exacerbated by soaring mortgage rates above 7% and new code rules increasing construction costs, has further dampened the Melamine market. The National Association of Home Builders reported a significant drop in builder confidence, citing the impact of higher mortgage rates on buyer enthusiasm. This slowdown in construction activity has subsequently affected the demand for Melamine in various downstream industries like laminate and coating, with the market grappling with affordability and inventory challenges. As of May 24th, the evaluated price for Melamine was recorded at USD 1781/MT FOB Texas, indicating a 10.6% decline compared to May 3rd.

According to ChemAnalyst, the price of Melamine is anticipated to increase in the coming months due to seasonal demand improvements and a modest economic rebound in exporting nations. Although the overall supply situation is expected to remain robust, newer contracts may face tightening and upward price pressures. Improvements in the manufacturing sector and increased operating rates, along with high energy prices, are expected to further drive up the production cost of Melamine.

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