Europe melamine buyers expect balanced Q2 market despite outages

07 March 2013 16:28  [Source: ICIS news]

LONDON (ICIS)--Melamine buyers in Europe expect to see a balanced market in the second quarter, and remain unconcerned about availability, despite a series of outages under way, sources said on Thursday.

“For the moment, I’m getting all the quantities we ordered, and we are even getting additional volumes for the first quarter,” a buyer said. “For the second quarter, we have not started discussions but I don’t think there will be problems with availability.”

Production problems at BASF's 65,000 tonne/year melamine plant in Ludwigshafen, Germany, are ongoing. Industry sources said the production problems could continue until the middle of the year, but there was no confirmation from the supplier.

Polish fertilizer producer Zaklady Azotowe Pulawy (ZAP) this week began a 20-day planned maintenance turnaround at one of its melamine plants in Pulawy.

Netherlands-based OCI Melamine will undergo its turnaround at the end of March. The turnaround is expected to take three weeks, with completion planned in the second quarter. The 150,000 tonne/year melamine producer, based in Geleen, is building up its stock levels and intends to fulfil its contractual requirements.

Qatar’s melamine facility at QAFCO will begin a partial shutdown in May, a source from the company confirmed. The 60,000 tonne/year melamine facility is located in Mesaieed Industrial City, near Doha, on the east coast of Qatar.

Austrian-headquartered Borealis will undergo an extended shutdown in the second quarter for the previously-announced revamp of its Linz, Austria, facilities. The dates of the shutdown remain unconfirmed, although there is some expectation it will begin in May or June.

Buyers said they are unconcerned about second-quarter availability because demand is lacklustre. Some buyers said they are being approached by sellers that are trying to offload volumes, and added the market is becoming more competitive.

“I guess the market will be balanced in Q2,” the buyer said. “Of course, anything can happen in a short space of time, but consumption is really weak and the outlook is not positive. Construction is slow because of the economy.”

Producers are expected to aim for price increases in the second quarter, on tighter availability, firmer demand and a need to recover lost margins.

First-quarter melamine prices rose by 10% because of limited availability, low stock levels and a move to restore margins to an acceptable level. Supply limitations have eased in recent weeks, and buyers said there was no justification for hikes in the second quarter, following the triple-digit rise in the first quarter, because the market is likely to be balanced.

“A €140/tonne ($182/tonne) increase contributes a lot towards regaining margin,” the buyer said.

Pricing indications are expected next week.

($1 = €0.77)


By: Helena Strathearn
+44 208 652 3214



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