Europe melamine market balanced on weak demand/supply cutbacks

03 February 2010 17:29  [Source: ICIS news]

LONDON (ICIS news)--Weak demand and limited supply meant that the European melamine market was largely in balance, sources said on Wednesday.

“Demand for Q1 has slowed down compared to Q4,” a producer said. Several buyers confirmed this when they said that they had enough stocks available for the rest of the quarter, adding it was unlikely they would have any additional demand for spot supplies during the quarter.

Meanwhile, supply was also cut back this week.

Polish producer Pulawy confirmed on Wednesday that the planned start up of one of its three lines in Poland on 27 January had not gone according to plan due to cold weather. As a consequence it was still running at approximately two-thirds of nameplate capacity.

A source at the company added that it was hopeful a rescheduled restart for either 5 or 6 February would be more successful. The line in Pulawy has an approximate nameplate capacity of 30,000 tonnes per year, or one-third of Pulawy’s total capacity, and has been down since 5 January.

Meanwhile, a source at Borealis confirmed this week that one of its low-pressure lines in Linz, Austria had been temporarily shut down since 31 January to in order to cut back supply in line with market conditions. The line was operating at a rate of about 10,000 tonnes of melamine per year, the source said, or at approximately 10% of its total annual capacity.

At the same time, the company was suffering from a production problem at another line in Linz which was operating at 75% of capacity. The source was hopeful that this issue would be solved within the next two weeks, and affirmed that neither of cutbacks were having an effect on its contractual obligations.

Domestic spot activity was not reported this week. However, prices were pegged €30/tonne higher at €980-1,050/tonne FD (free delivered) NWE (northwest Europe), in line with firmer first quarter levels.

First quarter contracts were agreed last week at €1,020-1,100/tonne FD NWE.

 ($1 = €0.72)

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By: Madelon Ten Cate
+44 20 8652 3214

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