Demand is seasonally low, and market sources say that it is easy to obtain additional volumes as needed
The low end of the European melamine spot price range has decreased on the back of ongoing slow demand in a well-supplied market, sources said on 26 February. The spot price range is at €1,140-1,200/tonne FD (free delivered) NWE (northwest Europe), a decrease of €20/tonne on the low end of the range.
Demand in the first quarter is typically poor and one trader said it is normal to see a slight softening in prices at this stage in the quarter.
“Demand is quite poor, especially in the laminate flooring business, therefore there is no way I can take extra volumes,” a buyer said. “Again, there is pressure on prices.”
Material is widely available, and sources said it is easy to obtain additional volumes, although traders said there are few enquiries.
The buyer added: “Some participants are trying hard to sell extra volumes, this is a clear sign there is plenty of material available.”
An uncertain economic environment has sapped consumer confidence in recent months, and the majority of buyers are purchasing on a hand-to-mouth basis.
Offtake is expected to pick up in the second quarter as activity in the end-use construction sector typically ramps up during the spring months.
Market participants are reasonably optimistic that volumes will be in line with – or higher than – the previous year, because of improved GDP forecasts.
“Normally the second quarter is the best of the year because of [activity in the] construction business and higher temperatures,” a trader said. “There is plenty of material, if you want it you can get it.”
It is too early for most players to comment on second-quarter contract pricing or direction, but one trader said it did not expect to see much change from Q1 prices, because of largely unchanged market fundamentals. Early pricing indications are expected in the next few weeks.
The trader went on to say that while the market is slow now, it might improve in four week’s time.
“The economy will be better and the mood is okay, so everybody is quite confident… it is very much dependent on the weather, which has been good. Economic figures are okay.”