'No smiling faces' in Turkish melamine market - trader

14 May 2013 15:21  [Source: ICIS news]

LONDON (ICIS)--Demand for melamine in Turkey has fallen as purchasing power in the end-use sector has been reduced on poor macroeconomic conditions, a Turkey-based trader said on Tuesday.

“There has been a 30-40% decrease in demand compared to [the second quarter of] 2012 for medium-density fibreboard [MDF] or chipboard in Turkey,” the source said.

A large proportion of melamine production goes into the wood-based panel industry. Melamine resins are applied to MDF to make it moisture resistant.

The source added: “The market [in Turkey] is weak this year. MDF producers are running with high stocks. Most of the players have come into 2013 with a good amount of melamine stock, so most did not buy much in the first quarter.

“There were some orders for [the second quarter], but it is still not like a normal second quarter.”

The trader explained that the third and fourth quarters are typically the healthiest demand-wise in Turkey, but said it had not seen Q2 demand at this low level before, adding: “Q1 [demand] is always bad, but [the second quarter] never this bad.”

Turkey was still showing healthy signs of growth in April in 2012, while demand in western Europe was slow. The lapse in demand is down to the economy, the trader said.

“Last year we were not affected too much by the crisis because we found some new export markets. But the [low] demand now is because of the economy. Let's see what will happen in [the third quarter]. There are no smiling faces here,” the source added.

The demand outlook in the European melamine market for the rest of 2013 is flat.

“It's not going to be a good year for melamine,” the distributor said. “I think there will be some acquisitions of MDF plants and some will not be able to survive.

“A few MDF producers are doing well. The niche producers will be okay, but others will go down, and others will be moving to the eastern part of Europe. It's not easy at the moment [as an MDF producer] to survive in Europe.”

Western Europe has had a colder-than-usual start to spring, and the weather in Turkey is not as warm as it normally is in May, the trader said. While the weather is not deemed to be directly affecting demand, it does seem to be affecting sentiment.

“It is the same here in Turkey. We are not seeing much sunshine. It should be warmer, but we are still – from time to time – wearing sweatshirts. It might not be affecting demand like the economy, but it's got a psychological effect,” the trader said.

Melamine is combined with formaldehyde to produce melamine formaldehyde resin. End-products include countertops, dry erase boards, fabrics, glues, housewares, guitar saddles, guitar nuts and flame retardants.

By: Helena Strathearn
+44 208 652 3214

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