22 August 2008 22:11 [Source: ICIS news]
WASHINGTON (ICIS news)--US melamine producer Cytec Industries stunned buyers with a announcement calling for a 20 cents/lb ($441/tonne, €295/tonne) price hike for fourth-quarter contract business, sources said on Friday.
The company said the hike would be implemented on 1 September, or as contracts allow.
Most contracts in the melamine market are settled on a quarterly basis, so the increment would apply to fourth-quarter pricing.
Spot transactions concluded on and after 1 September would also be increased by the same amount.
The company cited increasing global feedstock costs and a tight global supply/demand balance as contributing to the increase.
The two other melamine suppliers for ?xml:namespace>
One of the producers said that a formal announcement was likely to emerge next week, and that a similar increase might be nominated.
Melamine buyers had anticipated price increments for Q4, but said they thought that the nominations would not exceed 4-5 cents/lb ($88-110/tonne).
Prices had already been boosted by 14.50-16 cents/lb ($319-352/tonne) in the third quarter to 102.50-109.50 cents/lb for bulk business, according to global chemical market intelligence service ICIS pricing.
Another significant increment would be difficult to absorb, buyer sources said, particularly as downstream conditions remained soft.
Most key melamine applications have been suffering due to the slowdown in the
Producers said that melamine demand remained healthy and the market was tight due to recent and ongoing outages, with minimal spot volumes available.
A supplier said that North American product requirements had been robust in July and were likely to be even higher in August.
Contract negotiations were not anticipated to start in earnest until September, according to sources.
Cytec Industries, DSM and Agrolinz Melamine International (AMI) are among the major suppliers of melamine in
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