Russia's Eurochem plans Q2 melamine start up

22 February 2012 16:52  [Source: ICIS news]

LONDON (ICIS)--Eurochem is expected to come onstream with melamine production in the second quarter of 2012, the Russian producer said on Wednesday.

The producer expects a melamine nameplate capacity of 50,000 tonnes/year at its site based in Nevinnomyssk, Russia.

“We are planning to be onstream in the second quarter this year. Nameplate capacity is 50,000 tonnes per annum,” a source from the company said.

Spot melamine prices in Europe have fallen by around 43% over the past twelve months to November 2009 levels, following a year of weakening demand and increasing availability.

Overall demand remains stable at a low level, but while buying interest in western Europe is soft, sources said there is growth in eastern Europe, and notably in Turkey.

“The fourth quarter was a catastrophe in terms of demand,” a trader said. “It was a very slow start to the year, but the market picked up slightly.”

The trader added: “There’s a bit too much material on the market for the demand. I think we will see some adjustment to production in the next couple of years.”

The outlook is unclear owing to the instability of the global economy, but some players are positive about upcoming demand as spring approaches, and offtake from the construction industry is likely to improve.

“Demand is stable. There is plenty of material and we don’t expect further price decreases. It wouldn’t be healthy for the market if prices went down any more. The second quarter is always a bit better. We’re expecting better volumes…it is the building season,” a buyer said.

It is too early for any indication on second-quarter prices, but a producer said the industry has to have reached the bottom, as prices any lower are not sustainable from a margin point of view.

First-quarter contracts fell by €180-220/tonne ($240-293/tonne) from the previous quarter on ample availability and weak demand, and settled at €980-1,090/tonne FD (free delivered) NWE (northwest Europe).

($1 = €0.75)

By: Helena Strathearn
+44 208 652 3214

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