Severe imbalance between supply and demand of melamine

The world market for melamine continues to grow at a rate of 5% to 6%. The global melamine consumption growth is mainly due to the general improvement of the quality of life and the improvement of environmental protection standards. In addition to the traditional application fields of decorative boards, melamine cutlery, paints, textile finishing agents, etc., the development of new application fields such as high efficiency cement water reducer, melamine flame retardant, melamine foam, melamine synthetic fiber will also make The market capacity of melamine has further expanded.

In the past few years, China was one of the fastest growing countries in the world in demand for melamine. In 2009, demand increased by nearly 30%. In the past two years, the annual demand for melamine in our country has grown by almost zero. The pace of expansion has not stopped, the current supply and demand of domestic melamine has been a serious imbalance, application of the consumer is still mainly confined to the traditional field, far behind the growth rate of production. The contradiction between melamine supply and demand is mainly reflected in the following three points:

Overcapacity has intensified market competition As of the end of 2011, global melamine production capacity was approximately 2.5 million tons/year, and China's installation capacity was 1.35 million tons/year. In 2011, the global demand for melamine was about 1.4 million tons, and China's demand was about 540,000 tons.

The issue of overcapacity is already very prominent. However, in this situation, there are still a large number of new devices in various parts of the country. The units that have been put into operation this year include 50,000 tons of Honghu Yinzhu Technology, 30,000 tons of Chongqing Jianfeng, 50,000 tons of Shandong Haotian, 30,000 tons of Hebei Xinji Jiuyuan Chemicals, and 80,000 tons of Luxi Chemical. In addition, the 30,000-ton melamine project of Sanmu Group has been laid in this year's foundation in Wuhai, Inner Mongolia. It is expected that there will be nearly 300,000 tons of melamine plant in China scheduled to be put into operation in 2013. In the current gloomy market of melamine, the commissioning of these devices will inevitably set off a price war, which will make it difficult for the melamine market to improve.

Domestic demand presents a narrow range of domestic melamine is mainly used for the processing of laminates, coatings, paper, textiles, leather and molding materials. One of the largest areas of consumption is laminates, which account for more than 50% of total domestic consumption. The demand for laminates mainly depends on the rise and fall of the real estate market.

In recent years, the state's policy effect of regulating the real estate market has gradually emerged. The transaction price, trading volume, and the increase in the area of ​​new housing starts have decreased significantly. As the determination of the central government to regulate the real estate market this year is unshaken, it indicates that the downturn in the real estate market will continue. This will drastically reduce the demand for decorative materials and furniture such as laminates and reduce the demand for melamine in this area.

As for other areas of consumption such as coatings, papermaking, textiles, leather, and molded plastics, the impact of the macro-economic slowdown and other major environmental impacts have limited growth this year, and the demand for melamine cannot be effectively enlarged and may even shrink.

Impediments to exports have intensified the contradiction between supply and demand. China is currently the world's largest producer, consumer, and exporter of melamine. About 20% of melamine is exported every year, mainly exported to Europe, the Americas, Asia, and Oceania. The global economic downturn has reduced the demand for melamine. In addition, the European Union imposed anti-dumping duties on China's melamine products, and Chinese enterprises' exports to the European market have fallen sharply. Customs data show that from January to October 2012, melamine exports decreased by 35.6% compared with the same period of last year. The domestic surplus of melamine products is difficult to adjust and digest through the international market as in previous years, which further exacerbates the contradiction of oversupply in the domestic market.

With the release of new production capacity, the contradiction between overcapacity will be further aggravated and will have a great impact on the market. Especially in the current downturn of the international economy, poor export, tightening of domestic real estate control policies, and weak downstream market demand, the market price of melamine has been declining all the way. However, since the current price is already below the cost line, it is unlikely that it will continue to fall sharply in the later period. If melamine can achieve good performance in the next few years, it is the most effective way to increase downstream product R&D and production and promote consumption growth.