SINGAPORE (ICIS)--China’s melamine export prices have surged nearly 20% over three consecutive weeks, and the uptrend may continue in the near term amid restocking activities.
In the week ended 13 September, melamine prices were assessed at $1,200-1,220/tonne FOB (free on board) China, up by $200/tonne from the week ended 23 August, according to ICIS data.
Availability of cargoes was balanced-to-short as a major producer in China has kept its melamine plants shut amid ongoing strict inspections of chemical factories in the China for environmental compliance.
Shandong Shuntian’s three melamine units with a total capacity of 100,000 tonnes/year were forced to shut down on 28 July amid the environmental checks.
The company has delayed the plants’ restart from the initial schedule of 10 September.
Chinese exporters hiked their prices further as supply is limited amid restocking activities ahead of China’s National Day and Mid-Autumn Festival celebration on 1-8 October.
Spot offers were heard during the week at $1,220-1,250/tonne FOB China against buying indications capped at $1,150-1,200/tonne FOB China.
“I think there is still room for melamine prices to go up amid healthy downstream demand as most end-users are building stocks before the China’s long holiday,” a major exporter said.
Prices are expected to stay supported throughout the month as demand for melamine typically peaks in September, market sources said.
However, some market participants said the price uptrend may slow down in the coming weeks on resistance from end-users.
Buying interest weakened this week as the prices increased too quickly for end-users to pass the cost on to their customers.
Buyers have adopted a wait-and-see stance on the market until prices retreat to what they consider as reasonable levels.
“The feedstock price rise has exceeded the price rise of our downstream products, hence, our margins are eroded a lot,” a southeast Asian end-user said.
Melamine is used in table wares and in adhesives.
“We expect melamine prices to rise at a slower pace so that we have time to pass on to our customers,” the end-user said.
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Focus article by Judith Wang