Gustav prompts Cytec melamine force majeure

04 September 2008 22:14  [Source: ICIS news]

WASHINGTON (ICIS news)--US supplier Cytec Industries told customers it has declared force majeure (FM) on melamine supplies, a source said, as Louisiana plants continued to cope on Thursday with problems caused by Hurricane Gustav.

Cytec shut down its Louisiana plants in Louisiana and employees were evacuated over the 30-31 August weekend in anticipation of Gustav making landfall in the US Gulf coast.

The capacity of Cytec's plant is 80,000 tonnes/year, according to ICIS plants and projects.

While plant damage from the storm was minimal, Cytec will not be able to move product out of its facilities due to transportation disruptions, as roads remained packed with service trucks and evacuees returning to their homes in the area, a company source said.

Feedstock supply to the plant was also interrupted due to difficulties in moving trucks from neighbouring states into the manufacturing facilities.

The company expected the restart process at the melamine plant to begin over the upcoming weekend, the source said.

Unlike other facilities in the area, Cytec did not have a power outage, but nitrogen supply and other services had been interrupted. The plant could begin its restart process once nitrogen supply was restored and other operations could be brought back to normal levels, the company source added.

A European melamine supplier, who has a swap agreement with Cytec in the US, also confirmed that deliveries would incur delays over the next few days.

The supply disruptions were anticipated to tighten an already strained melamine market even further, sources said. North American inventories were said to be on the low side, both for suppliers and buyers, due to a snug global supply scenario.

The latest developments on the melamine production side came on the heels of recent price increase announcements for fourth-quarter business.

The tighter supply/demand ratio was anticipated to lend support to an 18-20 cents/lb ($397-441/tonne, €274-304/tonne) increase initiative recently proposed by melamine suppliers.

The contract price of melamine is currently 102.50-109.50 cents/lb for bulk business.

Cytec Industries, DSM and Agrolinz Melamine International (AMI) are the major suppliers of melamine in North America.

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By: Gabriela Wheeler
+1 713 525 2600

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