NewsFlashDSM to hike Q2 Asia melamine by 10%

12 March 2008 02:52  [Source: ICIS news]

SINGAPORE (ICIS news)--DSM Melamine, the world’s largest producer, has increased its second-quarter Asia contract offers by 10% or $150/tonne (€97.5/tonne) from the previous quarter on tight supply, a lower US dollar and higher logistics and raw material costs, a company official said on Wednesday.

Its offers rose to $1,650-1,700/tonne CFR (cost and freight) Asia with effect from 1 April, the official from its Indonesian subsidiary added.

"The price increase is necessary as we have to make progress in returning our global melamine business to a satisfactory level of profitability, which has been lacking during the past few years," the official said, adding that there were still no margins even at current market prices.

The melamine industry has been hard hit by stiff Chinese competition in recent years, which has led to closure of plants in Europe and Asia and investment delays, resulting in negative financial results in 2006.

However, melamine prices started to rise in the fourth quarter of 2007 as low-priced Chinese exports dwindled following subsidy tax cuts implemented by the Chinese government in July 2007.

From the middle of the fourth quarter to the middle of the first quarter this year, melamine prices increased 26% in Asia, 19% in China, 12% in the US and 7% in Europe, DSM said.

DSM expects the upward price trend to continue for the rest of 2008.

"The export capability of China is not sufficient to meet the need for imports from the Americas, Europe and Asia-Pacific and the market will remain tight," he said.

($1=€0.65)

By: Helen Yan
+65 6780 4359

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