Melamine Pricing Assessment
UNSPC: 13111030

• Russia-Ukraine Conflict (2022): The Russia-Ukraine conflict, which escalated in early 2022, has had significant repercussions on global commodity markets, including the melamine sector. The conflict has disrupted supply chains, affected feedstock availability, and contributed to rising prices across various chemical products. 

• Melamine is primarily produced from urea, and the conflict has impacted urea supply chains, particularly as both Russia and Ukraine are significant players in the fertilizer market. Disruptions in urea availability have led to increased costs for melamine production. 

• The conflict has caused volatility in global energy markets, particularly natural gas, which is a critical feedstock for ammonia production (a precursor to urea). Rising energy costs have further exacerbated the price increases in melamine. 

• Texas Winter Storm (2021): Many chemical plants in Texas were forced to shut down due to freezing temperatures and power outages. This included facilities that produce key feedstocks for melamine production, leading to a decrease in overall supply. 

• The winter storm impacted the supply of natural gas, a critical feedstock for ammonia production (which is used to make urea, a precursor for melamine). Reduced availability of these feedstocks further strained melamine production. 

• COVID-19 Pandemic (2020):  In the early months of the pandemic, melamine prices saw a decline as demand weakened and production slowed. 

• Geopolitical Tensions (2018-2019): U.S.- The U.S.-China trade war initiated in 2018 led to tariffs on various chemicals, including melamine and its feedstocks. This increased costs for manufacturers and created volatility in prices, as companies adjusted to new tariffs and sourcing strategies. 

• Shale Gas Boom (2010s): The shale gas boom led to an increase in the supply of ethane, a key feedstock for the production of melamine and ammonia. This abundance resulted in lower prices for these feedstocks, which are essential for producing urea, the primary precursor for melamine. 

• Global Financial Crisis (2008-2009):  the onset of the financial crisis, melamine prices dropped as demand plummeted and excess inventory built up in the market. 

• As economies began to recover in 2010, melamine prices started to stabilize and gradually increase, driven by a rebound in demand from key sectors 

• Hurricane Katrina (2005): Hurricane Katrina in 2005 had a notable impact on melamine prices, driven by production disruptions, supply chain challenges, and increased raw material costs. The event highlighted the vulnerability of the chemical industry to natural disasters and the importance of robust supply chain management. Companies should remain vigilant in planning for such disruptions in the future. 

These events underscore the Melamine market’s vulnerability to global disruptions and highlight the need for continuous monitoring of supply-demand dynamics.