Rollover to small increase expected in Q2 melamine contracts

10 April 2013 18:15  [Source: ICIS news]

LONDON (ICIS)--Melamine buyers and sellers in Europe said on Wednesday that a rollover or small increase is the most likely outcome in Q2 contract negotiations.

“We can argue about the stoppages, or that there is less demand," one buyer said. "But a rollover is realistic for this quarter.”

Other producers said they had agreed on contracts in line with Q1 prices or with small increases.

One producer said it had agreed to rollovers and increases of up to €65-70/tonne ($85-91/tonne), but said the majority of prices so far had rolled over or increased modestly.

“We are in negotiations, and it's becoming more obvious that we aren't seeing the higher increases," said one producer. "We are seeing rollovers and minor increases, depending on starting point.” The seller added that it had not agreed any decreases in its Q2 contracts.

“We haven't even started discussions yet,” one buyer said. “Hopefully we can achieve, at worst case, a rollover. We can’t take increases. Our customers will not accept any increases. We are being pushed for price decreases from our customers.”

Demand for melamine in Europe is steady at a low level, as ongoing concerns surrounding the eurozone debt crisis sap consumer confidence. A series of outages are planned for the quarter.

“Demand through the pipeline is low,” one buyer said. “People in the building industry and in the furniture industry are not seeing good demand. People are a bit reluctant to spend money.”

“They will all be happy if it's a rollover in the end. Demand is low. The first quarter was very poor in terms of demand volumes, and there has been no improvement up until now,” the first buyer said.

“May and June are usually the best months, so we hope that it will pick up then, but at the moment there are big question marks that the market will recover," another buyer said. "We are not too optimistic."

Negotiations are expected to conclude within the next two weeks.

($1 = €0.76)

By: Helena Strathearn
+44 208 652 3214

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