Poland’s ZAP hopeful of sustaining profits in melamine

08 March 2013 11:37  [Source: ICIS news]

LONDON (ICIS)--Zaklady Azotowe Pulawy (ZAP) is hopeful the encouraging reversal in fortunes on the melamine market will be sustainable for the foreseeable future, the Poland-based producer said on Friday.

Melamine prices in the first quarter have increased by around 10% quarter on quarter to an average price upwards of €1,300/tonne ($1,711/tonne), a level that could be seen as satisfactory in terms of margin, it added.

Restrained demand amid Europe’s economic difficulties along with production limitations in the region, that have tightened supply and were likely to continue, meant the situation should remain favourable, the company said.

Some buyers mistakenly expected Russian producer Eurochem to run its new 50,000 tonne/year melamine plant in Nevinnomyssk, at a rate far higher than the near 50% output level it reached in the first quarter, noted a source at ZAP.

“It takes time to get new melamine plants up to their capacity potential, it can be two-or-three years before they reach full production with stability,” he added.

If production problems at Germany-based BASF’s 65,000 tonne/year melamine plant in Ludwigshafen, continued for some time this would also be influential in balancing the melamine market in months ahead, the source said.

The changed fortunes on the melamine market became apparent from about half-way through the second quarter of last year following a bad 2011, ZAP said.

By August 2011, ZAP was stopping its 30,000 tonne/year high pressure Melamine III plant in order to optimise its fertilizer business.

A continuing plus for ZAP’s melamine business is that its production units are located near hubs of the wood processing industry, a big buyer of melamine for products needed in the making of furniture, the company said.

ZAP is counting with fast growth rates in the furniture sector of central & eastern Europe.

The company has the capacity to produce 96,000 tonnes/year of melamine.

($1 = €0.76)

By: Will Conroy
+44 20 8652 3214

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