Melamine Market: Poor Demand amid Ample Supply



The global and regional melamine markets are known for their volatility coupled with seasonality. The summer of 2019 was not an exception. The Chinese melamine market is currently struggling with excessive supply and poor demand in an effort to stabilize melamine prices by lowering plants’ operating rates. This trend became evident already in later 2018 when producers’ margins approached a typically unhealthy threshold line. With respect to melamine production, China is a global leader, beating all competitors by a wide margin.

Melamine: structure of the global production by country

The country hosts the world’s major melamine manufacturers, like Sichuan Golden-Elephant Sincerity Chemical Co., Ltd. (380k mty) and Shandong Liaocheng Luxi Chemical Co. (180k mty). There is some progress achieved by Chinese manufacturers in late August 2019 to curb the current negative dynamics via decreasing operating rates, though the market remains mostly bearish, and the weak demand leaves limited room for maneuver. The current China-US trade war may render an indirect influence. Direct melamine-involving import-export operations between the two countries are almost non-existent. However, trade with melamine-containing finished products (furniture, kitchenware, etc.) may be affected.

Likewise, the US market is demonstrating similar dynamics with ample supply and poor demand. A major US melamine manufacturer, Cornerstone Chemical Company, with a 75k mty facility in Fortier, Louisiana, is operating steadily, thus fully covering the national demand for melamine, which is not particularly high from the international perspective. The seasonal demand for melamine remains low.

In Europe, the situation looks more or less similar. It is likely that seasonality had its toll with drops in demand and traditional summer plants’ turnarounds, but the reasons for the lack of optimism may lie deeper. An 80k mty facility operated by Borealis in Lutherstadt Wittenberg, Piesteritz, Germany is currently undergoing a planned turnaround, while the company’s 50k mty plant in Linz, Austria, finalized scheduled maintenance and was successfully restarted in July 2019. Earlier in 2019, the European melamine market was forecasted to be tainted with uncertainty throughout the whole 2019. Despite the efforts to reduce Chinese melamine imports to Europe, it is still an issue. The melamine supply in Europe remains ample, and no significant melamine capacity additions are planned (some smaller melamine units may come on-stream in Russia in 2021). Melamine demand sentiments are rather lukewarm amid concerns about the possible economic slowdown in Europe, though such concerns have already become commonplace. However, the German manufacturing sector showed not very positive results as of August 2019, and Brexit-related prospects of ripple economic effects are looking grim in the case of a no-deal scenario. The demand for melamine traditionally follows macroeconomic trends.

More information on the global melamine market can be found in the insightful research report “Melamine: 2019 World Market Outlook and Forecast up to 2028”.

Title Date Pages Price
June, 2019 191 US$ 4,500.00
July, 2019 111 US$ 4,500.00