OUTLOOK ’19: Price stability seen in US melamine market

HOUSTON (ICIS)–After increasing by an average of 10 cents/lb in 2018, US melamine prices are entering 2019 on a more stable note. Prices are largely expected to rollover in the first quarter, although many negotiations are still underway due to the holidays.

There are indications of price rollovers from initial negotiations for Q1 supply contracts. Some special deals appear to be on the table for buyers willing to agree to volume increases. This is an indication that the US market is well supplied – which is also true of the global melamine market.

The stable supply conditions in the global melamine market follow turnarounds in all key regions during 2018. Turnarounds were especially heavy in Europe this year.

In light of supply conditions, buyers do not believe there is any basis for a price increase in the first quarter. During the last five years, prices increased three times during the first quarter.

If prices roll over in the first quarter, it would be the second consecutive quarter in which prices did not change. Prior to the fourth quarter, US melamine prices increase for four consecutive quarters.

As was the case in 2018, the US in 2019 will continue to import most of its melamine from the Netherlands, Trinidad/Tobago, Germany and Japan.

US imports during the first 10 months of 2018 were up by 8.6% from the same period in 2017. The US has imported more melamine than it has exported since 2015.

US imports from Japan should increase in 2019, after a big drop in 2018. During the first 10 months of 2018, US imports from Japan were down by 48% from the same period in 2017. The drop was the result of heavy turnarounds, which constricted supplies.

US melamine exports in 2019 should follow the same trend as 2018, with the UK being by far the largest destination for US material.

During the first 10 months of 2018, US shipments to the UK at 8,370 tonnes were almost four times higher than they were in the same timeframe in 2017.

Other key destinations for US exports in 2019 include Canada, Brazil, Colombia and the Netherlands.

Cornerstone Chemical is the only melamine producer in the US.

US melamine imports, exports from 2013, in tonnes

Source: US International Trade Commission

Focus article by David Love

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