Melamine Q3 talks gather pace

02 July 2008 17:54  [Source: ICIS news]

LONDON (ICIS news)--European third-quarter melamine contract discussions gained momentum on Wednesday, with buyers expressing concern at the extent of the proposed increases.

One producer said it had already had some success at implementing increases of between €200-250/tonne ($317-397/tonne) and was hopeful the outstanding accounts would reflect the same success.

Another supplier agreed that this quarter was hotly tipped to see one of the largest increases in melamine.

“Look at every market, it’s crazy at the moment,” the source explained, “feedstocks are going up and up, so we need to act”.

With crude hitting an all-time record high last week and urea costs riding high, sellers said they had no choice but to seek significant increases.

Buyers, however, were stunned by the amount and said pushing through such numbers would render margins untenable.

“We have no idea how to pass this on downstream,” one panicked, concluding that the €200/tonne plus target sought by the major producers was “far from a compromise”.

Negotiations were not expected to conclude for another couple of weeks, with buyers desperate to avoid the full extent.

($1 = €0.63)

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By: Fiona Bond
+44 20 8652 3214

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