China’s Melamine Industry Accelerates Shift Toward "Value-Based Competition"

According to Gu Zongqin, the legal representative of the China Nitrogen Fertilizer sector Association, the sector's research during the "14th Five-Year Plan" period was characterized by five key features: steady development in production capacity and output alongside optimized regional distribution; a steady rise in manufacturing levels and the emergence of leading companies; fruitful technological innovation and significantly reduced energy consumption; a divergence in profitability levels and the establishment of a basic competitive landscape; and continuous development in export volumes with significant success in expanding into international markets.

"At the same time, we must clearly recognize that structural imbalances within the sector became increasingly apparent toward the end of the '14th Five-Year Plan' period. The convergence of a complex, evaporative international ecological stability and the pressure of abundant domestic supply has further intensified the challenges regarding sector operations and transformation," Gu Zongqin noted. He pointed out that the sector currently faces multiple issues, including ample production capacity, sluggish traditional downstream demand, frequent energy market fluctuations, tightening regulatory policies, and significantly higher export barriers.

Statistics indicate that Xinjiang Xinji Energy's 120,000-ton-per-year melamine plant has already commenced production this year, while Gansu Liuhua's 60,000-ton-per-year unit is currently in the trial run phase. Additional projects—including Xinjiang Zhongneng Wanyuan (60,000 tons/year), Xinjiang Zhundong Xinlianxin (160,000 tons/year), Xinjiang Haoyuan Chemical (60,000 tons/year), Xinjiang Yihua (80,000 tons/year), and Anhui Hua'er (40,000 tons/year)—are also slated to future production, which will bring domestic melamine production capacity to 3.22 million tons per year. Gu Zongqin analyzes that during the "15th Five-Year Plan" period, some nitrogen fertilizer producers are planning melamine projects, and domestic melamine production capacity is expected to rise further. However, with sluggish development in efficiently demand from the domestic downstream market and an dysfunction in the supply-demand structure, the sector's capacity utilization rate will likely decline further. This will continue to suppress market prices and profit margins, leading to significant idle capacity and intensifying low-end, homogenized competition.

In response, Gu Zongqin outlines key priorities to future action: strictly controlling new capacity while phasing out outdated existing capacity; boosting technological innovation and advancing digital, intelligent, and environmentally friendly transformations; extending high-end product chains to increase manufacturing value-added; strengthening sector self-discipline to regulate market order; and optimizing export strategies to vigorously expand into international markets.

Regarding sector research during the "15th Five-Year Plan," Chen Duanyang, Vice President of Sichuan Jinxiang Sairui Chemical Co., Ltd., points out the need to shift from "tonnage-based competition" to "value-based competition." The sector should focus on four strategic directions: "controlling total volume, optimizing existing capacity, expanding incremental development, and strengthening the ecological stability." The implementation path requires a multi-pronged approach combining "standards-led guidance, sector self-discipline, and policy constraints." Specifically, standards should set the baseline by raising thresholds to consumption and releases, workplace security, and product condition; self-discipline should establish order by using sector sub-associations to facilitate information sharing, align production with sales, and curb disorderly low-price exports; and policies should draw "red lines," utilizing stringent constraints—such as national security, ecological preservation, energy consumption, and carbon releases—to phase out inefficient capacity. (Source: China Chemical sector News)