Early US Q4 melamine contracts agreed at rollovers

20 September 2017 22:45 Source:ICIS News

Tero Sivula/REX/Shutterstock HOUSTON (ICIS)--As negotiations for US melamine contracts for the fourth quarter pick up steam, some agreements have already been finalised at rollover pricing, market participants said on Wednesday.

However, the sole domestic producer is confident that it will get the increase it is seeking.

Many Q4 supply contracts between domestic buyers and offshore suppliers, not including European suppliers, have been agreed at rollover pricing, sources from both groups confirmed.

At the same time, Cornerstone Chemical, which on 6 September nominated a 5 cent/lb ($110/tonne) price increase effective 1 October, said that all signs point to higher prices in the fourth quarter. Cornerstone is the only melamine producer in the US.

Among the key reasons for the price increase is that the exchange rate is going up, Cornerstone said. There has been about a 10-cent/lb swing in the exchange rate between the US dollar and the euro since April, the producer added. 

Additionally, melamine supply is tight in Europe and China, which could have global ramifications in the fourth quarter.

Many domestic buyers, especially larger buyers, said they have not yet started quarterly negotiations with Cornerstone, but plan to soon.

One large buyer said that it remains to be seen what will happen with its domestic pricing for the fourth quarter. However, the buyer said that the domestic producer’s insistence on higher prices could push more buyers toward imports.  

Most Q4 negotiations will be finalised by the end of September or early October. Many contracts with larger US buyers have not settled yet.

ICIS had assessed US Q3 melamine contract prices at 84-90 cents/lb FOB (free-on-board) US Gulf.

Pictured above: Melamine is used primarily to manufacture resins that are used in surface coatings, laminates, molding compounds, paper treatment, and adhesives. Source: Tero Sivula/REX/Shutterstock

By David Love