Europe melamine industry to struggle with proposed hikes - buyers

08 December 2010 15:51  [Source: ICIS news]

LONDON (ICIS)--European melamine consumers are concerned the industry will not be able to withstand the steep increases proposed by producers for the first quarter, as tightness continues to put a strain on the market, buyers said on Wednesday.

A major European melamine producer said it would be targeting first quarter increases of €230-250/tonne ($307-333/tonne) owing to the tight supply and expected volume restrictions during that period.

This followed news that producers were aiming for €200-225/tonne increments because of reduced stock levels following months of restricted availability.

According to one supplier, the reaction has so far been fairly muted as consumers have been preparing for the negotiation process.

“Clearly, we’re not happy with those projections. This industry can’t sustain such high prices,” a buyer from the laminates sector said.

“These prices are far from ideal but what choice have we got?” the buyer added.

A second consumer also said it would be difficult to achieve another increase.

“It’s impossible to increase again, they will try but there’s no justification or motive,” the consumer said.

In response to the most recent price increase announcement, another supplier said this confirmed "the obvious tightness" in the melamine market.

Another seller said it would be announcing its intentions within a couple of weeks.

“Most probably we’ll act the same and aim for increases of €200-250/tonne for the same reasons. Also, gas prices in winter are always high,” the seller said.

The European melamine market has been short since summer because of unplanned and prolonged shutdowns combined with strong demand.

As a consequence, fourth quarter contracts settled at €1,410-1,530/tonne FD (free delivered) northwest Europe (NWE), up €200-230/tonne from the previous quarter.

($1 = €0.75)

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By: Helena Strathearn
+44 208 652 3214



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