Wide gap in pricing ideas likely to slow Q2 melamine discussions

27 March 2013 15:22  [Source: ICIS news]

LONDON (ICIS)--Second-quarter contract discussions in the European melamine market are in the early stages and negotiations are expected to be tough and lengthy, sources said on Wednesday.

Most players expect that it will "take some time" before buyers and sellers reach an agreement on second-quarter contracts, or even before any clear direction is evident for the approaching quarter.

Producers’ nominations vary, with hikes of €45-100/tonne ($58-128/tonne) being targeted on expected supply constraints because of planned outages in the sector.

Buyers, however, are strongly resisting price increases as demand remains lacklustre and supply is good. Buying interest has been weak since 2011 on poor macroeconomic conditions. Consumers are seeking rollovers or decreases in the seond quarter.

“There is still a big gap in ideas. Sellers are aiming up to €100/tonne and buyers are not wanting this and are wanting decreases,” a trader said. “Discussions are in their early stages.”

The trader added the second quarter is typically the strongest, but said it had not yet seen any exact quantity forecasts from its customers.

“As of today, I don't think customers are desperately looking for material. Everybody is waiting. The second quarter will be balanced to tight. The big producers are professional so they will have buffer stock, but they will have no additional volumes to offer so if there is extra demand, then the market will look tighter,” the trader said.

A consumer said: “Producers have to be careful. Business is very poor. They can't sell their product because there is not enough demand from the industry. It [the second quarter] will be anything but tight.”

First-quarter contract prices went up by €140/tonne as a result of tight supply, low stock levels and a move to restore margins to an acceptable level.

($1 = €0.78)

By: Helena Strathearn
+44 208 652 3214

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