Europe Q1 melamine contracts settle at further decrease

18 January 2012 23:59  [Source: ICIS news]

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LONDON (ICIS)--First-quarter European melamine contract prices have dropped by €180-220/tonne ($228-278/tonne) from the previous quarter on ample availability and weak demand, sources said on Wednesday.

Prices have been assessed at €980-1,090/tonne FD (free delivered) NWE (northwest Europe).

One producer that concluded some contracts below €980/tonne FD said: “There was strong pressure from the buyers for decreases because of the good availability and weaker demand.”

The producer said the biggest strain on the market came from low-priced imported volumes.

Attractively-priced material is coming in from Qatar and Trinidad, and has been exerting downward pricing pressure on the market through the previous two quarters.

Sources said that in order for producers to secure contracts, prices had to be lowered.

“We are still in discussions for contracts, but we have already seen a big drop in prices,” a buyer said.

Another buyer said it thought the market was now close to the bottom of pricing, adding: “We may soon have a case where the producers have a problem with the costs, so I don’t think these low prices are sustainable.”

Melamine demand began to slow in the second quarter of 2011.

“The market is still weak, and Europe is seeing lower prices,” a producer said. “Finished production of furniture is not moving, but we have to keep moving our product…so that’s what we’ll do.”

Demand in the first two weeks of January was very slow, but a producer said orders were now coming in: “Demand is slowly firming up, we are now seeing healthier order intake for February and March, but we’re not happy with the margins.”

However, most players are reluctant to commit or make longer term predictions.

“The only positive,” the producer said, “is that if there is any upturn, it will happen quite quickly.

The spot range is now €930-1,000/tonne FD NWE, compared with €1,180-1,240/tonne FD NWE at the beginning of the fourth quarter.

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 = €0.79)

For more on melamine, visit ICIS chemical intelligence

By: Helena Strathearn
+44 208 652 3214

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