Price and market trends: Europe Q3 melamine pricing ideas begin to emerge in long market

23 June 2014 00:00 Source:ICIS Chemical Business

Third-quarter pricing ideas have begun to emerge in the European melamine market, as many participants say that they intend to begin negotiations over the next 1-2 weeks, sources said on 11 June.

A couple of buyers, one of whom purchase exclusively on the spot market, said that they were expecting a decrease in the contract price for the third quarter of the year on the back of a long market, both in Europe and abroad, and relatively weak downstream demand.

One small producer said that it expects many buyers to argue for a price decrease in the next quarter on the back of low prices in feedstocks urea and ammonia. It also noted that Chinese producers are continuing to price aggressively.

Q3 melamine

It added: “[Major producers] will have a hard time play[ing] outside Europe…If the price keeps going down, the time will come when producers will consider whether to produce melamine or not.”

Another producer, based in Qatar, said that it has already concluded all of its European contracts for the third quarter at a decrease, noting that third-quarter prices are normally lower than the preceding quarters of the year.

It said: “I agree as China [prices have bottomed out] but they are now [at] about 60-70% stock level. For melamine grade A, availability is still less than demand because there are not many grade A producers in China.”

A third producer was bullish on the market for the third quarter, saying that downward pressure on prices from abroad is now decreasing due to some feedstock issues in Trindad and Qatar. It expects a rollover to a small increase in the upcoming negotiations.

It said: “The supply and demand situation in Europe is balanced…more balanced than originally thought. Inventory stocks are quite low and there is some planned maintenance ahead.” It later added: “The pressure from foreign material is rather limited…[it] was higher earlier in the quarter but has gone down now.”

By Chris Barker