AFPM '19: US Q2 melamine contract discussions loom ahead of peak season

Source: ICIS News

2019/03/23

HOUSTON (ICIS)--US melamine is steady-to-soft heading into this year’s International Petrochemical Conference (IPC).

Some have made early suggestions that Q2 contracts could roll over or decrease slightly, but the final direction is unclear.

Most contract negotiations are expected to pick up over the next few weeks, with market players likely assessing upcoming peak demand.

There is downward pressure on prices due to healthy global supply, but stronger seasonal demand could offset that. If lengthy supply persists going into the second quarter, it could lead to competitive offers for material.

Production in the global melamine market has been described as normal, readily able to meet demand. This year’s turnaround activity will be light, following last year’s heavy maintenance schedule.

Supply in Europe and Asia is long, with buyers not rushing to purchase cargoes. But market participants are saying operating rates could be cut in China due to persistent negative margins.

Activity in the housing and construction sectors generally increases during the summer season with the start of warmer weather. Demand could receive a boost this year as US economic growth rates remain healthy compared to other parts of the world.

The extension of a truce in the trade dispute between the US and China should also boost optimism and remove some of the gloom regarding sentiment.

Upstream, the international urea market remains under downward pressure due to a lack of demand from major importing hubs and a continued lack of market direction from the US.

Against the backdrop of a flurry of spot sales of relatively small cargoes, opinions over pricing direction for the second quarter have started to diverge in the global ammonia market.

Melamine is used to make a molding powder that has many uses, from making dinnerware and automotive parts to buttons and appliances.

Adhesive resins made from melamine are used in the production of plywood, chipboard, truck and railcar flooring, marine plywood and toilet seats. The construction and automotive industries are strong growth drivers for melamine.

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Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Tarun Raizada