Melamine Paper Prices Fall Amid Weak Demand and lopsided Market Fundamentals

Shanghai (China): During the initial weeks of June 2024, Melamine Paper prices in the Asian market declined due to weak support from feedstock Melamine costs. The Melamine Paper market experienced reduced activity throughout the past month, primarily driven by inadequate cost support and the shutdown of several feedstock production units for maintenance, resulting in lower utilization rates for Melamine production. Despite this, downstream demand for Melamine Paper remained weak, with replenishment primarily based on immediate needs, leading to a supply-demand imbalance. The market atmosphere for Melamine Paper was subdued, with high prices deterring transactions. Sellers adjusted their offers based on market conditions, resulting in mainly small, on-demand orders.

Additionally, last month's election activities in India and a severe heatwave in the region impacted downstream demand for laminates and coatings at construction sites. The Asian market faced an oversupply of Melamine Paper, leading to further lower prices. This oversupply, combined with weak support from feedstock Melamine, further pressured prices. India’s manufacturing sector experienced slower growth last month due to the severe heatwave. Overall demand for Melamine Paper remained subdued, influenced by declining global wood prices. High coal prices, driven by elevated temperatures and peak sales season pressures, continued to impact production costs in the energy sector.

Moreover, rising port congestion in major Asian hubs, driven by seasonal increases in cargo volumes and geopolitical disruptions, exacerbated supply chain challenges. However, existing high inventory levels discouraged additional procurement, putting downward pressure on Melamine Paper prices. Demand from downstream sectors such as plywood, laminate, and furniture has been weak as global lumber prices fell by 20%. This decline is largely due to rising mortgage interest rates in the USA, which have surpassed 7%, making the cost of buying a home the highest on record and negatively impacting market sentiment. Consequently, procurement activities have slowed significantly in the domestic market, with buyers hesitant to place new orders amidst these challenges. Small orders continued based on immediate needs, but new transactions were limited, reflecting a weak market atmosphere. Reduced Melamine costs further lowered production expenses, while sluggish domestic demand and subdued economic conditions in China pressured prices downward. As a result, procurement activities for Melamine Paper were cautious, with buyers anticipating further price drops, contributing to an overall bearish market sentiment.

According to ChemAnalyst, the price of Melamine Paper is expected to rise due to increasing energy costs, port congestion, positive indicators in the Asian market, and continued industrial expansion, suggesting improvement in demand. Moreover, the manufacturing sector is expected to keep improving, although at a slower rate, as demand and trading activities gradually increase.