Persistent Melamine Price Drop Amidst Low Demand and Poor weather

Hamburg (Germany): The Melamine market in Europe 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 fluctuations have been notably impacted by the downward trajectory of the crucial feedstock urea, resulting in adverse effects on both sales and profit margins. This scenario has compelled market participants to adjust their ex-quotations downward in an attempt to stimulate sales. Additionally, a sustained reduction in demand from importing nations has exacerbated the Melamine market dynamics, leading to further price reductions.

In Germany, manufacturers faced daunting challenges amidst the prevailing market conditions, struggling with elevated inventory levels and a dearth of buyers for Melamine. The slowdown in construction exacerbated this predicament, leading to surplus supply and a consequent decrease in demand. Inquiries from downstream coating and laminate industries remained scarce, mirroring the negative sentiment prevailing in the Melamine market. Reports of subdued demand and destocking among clients compounded the issue, culminating in an eleventh consecutive month of dwindling new orders. Furthermore, the decline in new export volumes was attributed to subdued demand from crucial export markets. Additionally, low natural gas prices, driven by increased production and higher inventories, further reduced the cost of producing Melamine, intensifying the challenges faced by manufacturers.

After mid-May, trading activity remained sluggish in Germany, with limited inquiries and continued subdued demand from downstream laminate, coating, and other end-use industries. Germany's construction sector is experiencing a significant downturn, with weak market sentiments driven by a lack of orders and persistent project cancellations.

High material costs and surging interest rates have deterred developers and investors, leading to a decrease in building permits and stalled new developments, particularly in the residential sector. Consequently, the low demand in the construction market impacted the demand for Melamine in downstream coatings, laminates, and other end-use industries. Furthermore, constant weather problems in the region have worried farmers during the planting season for many crops. Bad thunderstorms and heavy rain across Europe have dampened fertilizer-buying enthusiasm amid fears of possible crop damage and potential losses, impacting feedstock urea prices. Additionally, harsh weather conditions have reduced construction activities, leading to low demand for Melamine in downstream laminate, coating, and other sectors. Market sentiments have turned negative as the severe weather continues to create uncertainty. Procurement activities have slowed significantly, with buyers hesitant to place new orders amidst the ongoing disruptions. This instability has made it difficult for businesses to plan and execute their projects, further contributing to the weak demand for Melamine.

According to ChemAnalyst, Melamine prices are expected to increase in the coming months, driven by seasonal demand upticks and economic recovery in exporting nations. With normal weather conditions and increased demand from downstream industries like coatings and laminates, Melamine prices are poised to improve. While overall supply remains robust, newer contracts may face tightening and upward price pressures due to heightened Melamine demand.