Europe Q1 melamine rises by €200-220/tonne on tight supply

19 January 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European first-quarter melamine contract prices have risen by €200-220/tonne ($267-293/tonne) from the fourth quarter due to limited availability, sources said on Wednesday.

ICIS assessed European melamine prices at €1,630-1,730/tonne FD (free delivered) NWE (northwest Europe), up from €1,410-1,530/tonne FD NWE in the fourth quarter of 2010.

“I have settled one of my major contracts with a producer and another smaller contract with an importer. Both are at increase levels between €200-220/tonne for the quarter,” said a buyer.

The price increases came after tight supply in the fourth quarter.

A major producer said: “We have concluded virtually everything very close to the €220/tonne mark, which indicates that there is still tightness in the market.”

A source said there was a need to bring contract prices more in line with spot prices, which were currently trading at €1,600-1,800/tonne FD NWE.

Buyers had hoped to achieve lower price increases and did not think the market was tight enough to justify the hikes imposed by producers.

“We did not succeed in achieving the increases we wanted. There was no agreement possible below €200/tonne,” a buyer said.

“I can tell you that there is a good balance between supply and demand. I’m really sure that there is plenty of material, but what can we do?” the buyer said.

Some consumers said that prices had reached their peak and hoped that second-quarter prices would ease.

“I believe pricing has peaked. I expect to see quarter-on-quarter rates coming down by €50-100/tonne back to [the levels of the] fourth quarter 2010,” another buyer said.

Another buyer expressed concern: “I hope there’s a [supply] relief at the end of March. I’m afraid the price level won’t decrease at the same rate as it’s increased.”

The majority of market sources said it was too soon to estimate the pricing direction for the second quarter, but most agreed the market would be more balanced.

Melamine is combined with formaldehyde to produce melamine resin, a durable thermosetting plastic used in heat-resistant, wipe-clean plastic laminate, and melamine foam. The end-products include countertops, dry erase boards, fabrics, glues, housewares, guitar saddles, guitar nuts and flame retardants.

($1 = €0.75)

For more on melamine visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Helena Strathearn
+44 208 652 3214

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