Europe Q3 melamine contract prices dip on good supply, low demand

17 July 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--Third-quarter melamine contract prices in Europe fell by €70/tonne ($92/tonne) from the second quarter, because of lower demand and competitive pricing in a well-supplied market, buyers and sellers said on Wednesday.

The range is at €1,350-1,400/tonne FD (free delivered) NWE (northwest Europe). Some contracts were agreed with smaller or bigger price decreases, depending on starting point.

Despite a few planned turnarounds this quarter, there is sufficient material to meet demand requirements.

Germany-based chemicals major BASF resumed melamine production at its 65,000 tonne/year Ludwigshafen facility in June, following production problems, market sources said. There has been no confirmation from the supplier. Supply from BASF had been reduced since September 2012.

“There is enough material out there,” a producer said. “BASF came back into the picture, so that has had some effect on pricing.”

Demand for melamine in the third quarter is usually weaker than the others in the year because of the traditional summer slowdown. Offtake from southern Europe is down by around 20% compared with the second quarter, and overall demand is lower than it was in the third quarter of 2012.

“It is a reasonable decrease, given the market circumstances,” the producer added.

Competitively priced imports and spot offers have put downward pressure on pricing.

“The market is really weak, and competition is high,” another producer said.

A third producer said: “We had to accept decreases due to the competitive offers in the market. Demand is not promising, but it's also not so bad. BASF is back in the market and we had to be flexible."

Producers were aiming to maintain the second-quarter pricing level, while one was seeking a price hike. However, buyers saw no justification for a price increase.

“The decreases are demand driven,” a buyer said. “Supply is slightly better with BASF back in the market. We have lower demand in Q3 than we did in the second quarter, and in the third quarter last year.”

Another consumer said: “Downstream demand is slow, and re-entry of BASF production into the market means they are buying less and selling into the market more. The other turnarounds are planned, so the producers are stocked up.”

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

($1 = €0.76)

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By: Helena Strathearn
+44 208 652 3214

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