Price and market trends: Europe melamine demand could rise on flooding

28 June 2013 09:50  [Source: ICB]

There is some expectation buying interest for melamine will rise slightly in the coming months, as homeowners look to repair damage to flooring and kitchen furniture following flooding in parts of Europe, sources said.

The full extent of the flood damage is not yet known, but repair projects are being planned, sources said.

"We're hoping the flooding will create some business," a consumer said. "There will be some projects in place to repair the damage done by the floods. So it should have some positive effect [on the melamine market]."

A European producer said: "There is hope that demand will increase because of the flooding."

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

The producer expects to see better demand in the third quarter versus the second. It explained that properties hit by flooding would need to have flooring, kitchen counters and cupboards replaced, and that melamine demand is likely to increase as a result.

The supplier added that in the last couple of weeks it had seen a slight increase in enquiries for additional trucks, over contracted volumes. "You need the flooring earlier rather than later. In the last two weeks, we've seen additional orders above contracted volumes," the supplier said.

However, the buyer was doubtful that the market would see much of an uptick in melamine consumption in the third quarter.

"Whether this will happen in Q3, I doubt," the buyer said. "There is quite a bit of flooring in stock. The industry pipeline can handle [any demand increase]."

The buyer said demand from flooding "won't be enough to change the market. We discussed it as a potential because the market is really slow. It could counteract a further decrease [in prices]. Will it outweigh the weaker demand from the holiday season? I doubt it. The third quarter is usually slower".

The producer is targeting a €50/tonne ($67/tonne) hike in its Q3 contracts on low inventories, healthy export demand and on expectations of increased buying interest, following the flooding.

Most expect prices to roll over or decrease. Buyers are aiming for falls of at least €30-50/tonne, on weak demand in a well supplied market and expectations of a traditionally slower third quarter.

By: Helena Strathearn
+44 208 652 3214

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