OUTLOOK '18: US melamine prices poised to firm amid tight global supply

28 December 2017 22:30 Source:ICIS News

HOUSTON (ICIS)--US melamine prices are poised to rise in the first quarter of 2018 on tight global supply and steady demand in most major consuming regions of the world.

However, ongoing and upcoming melamine plant turnarounds in Europe and China are expected to impact melamine prices during all of 2018.

Cornerstone Chemical, the only melamine producer in the US, intends to increase melamine prices by 3 cents/lb ($66/tonne) effective 1 January or as contracts allow, citing continued strong demand and global tightness on melamine.

Market participants in early December said that Southern Chemical separately nominated a price increase of 3 cents/lb effective 1 January. Southern Chemical distributes melamine produced in Trinidad and Tobago.

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There has been talk that suppliers of Japanese melamine are separately eyeing an increase larger than 3 cents/lb for the first quarter, but there is no definitive news at this time.

European suppliers are also expected to seek higher prices from US customers in the first quarter. OCI Melamine has informed some US customers that it will not be able to supply as much product in the first quarter. The producer is still running at reduced rates at one of its plants.

Market participants were not surprised by the price increase announcements. Some said they would have been more surprised had there been no nominations, given current market dynamics.

The global melamine market has been tight on supply since the fall of 2016 when Chinese melamine producers were plagued with all sort of problems, ranging from unplanned maintenance, plant closures and government environmental inspections.

Additionally, at this time of year natural gas is curtailed at various plants in favour of residential customers.

Like last year, some melamine plants have been closed down or forced to run at reduced rates.

Even though the US does not import melamine from China, or export material to China, the US – and the global market – has been affected by the overall shortness of product in the market.

Source: US International Trade Commission
By David Love