08 October 2012 15:07 [Source: ICIS news]
BUDAPEST (ICIS)--Melamine contract prices in Europe are likely to rise by €200/tonne ($260/tonne) in the fourth quarter on tight supply and severely reduced inventories amid steady demand, sources said on Monday.
Speaking on the sidelines of the 46th European Petrochemical Association (EPCA) meeting, buyers and sellers confirmed that there had so far been little negotiation on the level of price rise, as producers are determined to push contract prices up in a bid to recoup margins and return the industry to a "healthy, sustainable" level.
Producers’ margins have been squeezed since the second quarter of 2011 on firm raw material costs, and weakening demand in a poor macroeconomic climate.
A lack of imports, production disruptions and a need to return the market to a healthy, sustainable level has resulted in price hikes of €180-250/tonne being passed in fourth-quarter contracts.
“Availability is at its lowest since September 2010,” a seller said.
Demand is steady and comparable with levels seen at the same time last year, but consumption levels are about 20-30% lower than they were in previous years.
Third-quarter melamine contracts in Europe settled at €1,080-1,150/tonne FD (free delivered) NWE (northwest Europe). Spot has sold this week at €1,350/tonne FD NWE, but few deals are taking place.
Looking ahead to 2013, demand is expected to remain flat and the market is likely to face further increases in the first quarter, a producer said, because of supply shortages.
The annual EPCA meeting runs from 6-10 October.
($1 = €0.77)
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