Buyers brace for China melamine hike after quake

15 May 2008 05:41  [Source: ICIS news]

SINGAPORE (ICIS news)--Customers are bracing themselves for a huge spike in the melamine prices following a massive 7.9 magnitude earthquake which hit the south western province of Sichuan in China on Monday, a major buyer said on Thursday.

“Although the impact on pricing may not be immediate, we are preparing ourselves for a big jump in prices in the third quarter, given that the urea supply will be severely reduced,” the buyer said.

Urea is the feedstock for melamine.

Spot prices of Chinese melamine are likely to soar above $1,700/tonne (€1,105/tonne) FOB (free on board) China in the weeks ahead following the disruption in supply from the closure of urea and melamine plants in Sichuan, he added.

Current prices of Chinese melamine are around $1,550-1,600/tonne, although a south China producer increased its offers by $50/tonne to $1,650/tonne in the wake of the earthquake this week.

Sichuan province, which housed many fertilizer plants, including ammonia, urea and melamine, bore the brunt of the earthquake.  The Chinese government had required all the chemicals plants to halt production as a precautionary measure.

Two melamine plants, Sichuan Chemicals and Sichuan Meifeng, were among the chemicals plants that were shut. It was not known how long they would be shut down.

Sichuan Chemicals has shut down five lines. Each of the five lines has a capacity of 12,000-14,000 tonnes/year. Sichuan Meifeng has a 700,000 tonne/year ammonia plant, a 1 m tonne/year urea plant and a 6,000 tonne/year melamine unit.

($1 = €0.65)

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By: Helen Yan
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