05 November 2008 23:59 [Source: ICIS news]
LONDON (ICIS news)--The majority of players in the European melamine market finally have concluded most of their fourth-quarter contracts at average increases of €60-90/tonne ($77-117/tonne) from the third quarter, they said on Wednesday.
Although one major European producer said that “the majority of contracts were now concluded at increases of €110/tonne”, other players talked about lower increases.
One buyer said it had settled the majority of its fourth-quarter contracts at increases of €60/tonne, while a few other consumers said they had even settled at a rollover.
It appeared that these early settlements were no longer representative of current circumstances, however, as most players in recent weeks confirmed increases of up to €100/tonne.
Producers had originally announced steep price increments of up to €250/tonne for the fourth quarter, in order to regain margins and to cover themselves for the rising gas levels which are a seasonal occurrence at the end of the year.
However, with upstream urea prices coming down in recent months and demand also in decline, the market turned more bearish during the negotiations.
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Meanwhile end-user demand from the construction industry in particular had dropped significantly over the last few months, putting more pressure on producers to accept smaller increases.
One buyer said that it had taken less contract volumes than previously forecast, approximately 70-80% of the original levels.
In line with the majority of numbers, Q4 levels were adjusted to €1,420-1,520/tonne FD NWE, decreases of €60-90/tonne.
($1 = €0.77)
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