Spot
The European melamine spot price has fallen by a further €30-40/tonne as demand is weaker than it has been over the last few weeks, and as supply is good. Spot volumes are now trading at €1,200-1,290/tonne FD NWE. Business for the quarter has mostly been done, but there are a few buyers that are securing the last of their volumes now, as prices are softening.
Prices could decrease slightly more later in the quarter, if demand dips further, but sellers expect that values will stabilise in the fourth quarter.
There are some reservations, however, as sources say market demand will depend on how the world economy develops over the next few months.
Demand/supply
Demand is flat to weak. August is traditionally the quietest month as many players are on summer holidays. Many businesses in the south of Europe shut for a few weeks at a time during this period.
Offtake is expected to improve in September and in the fourth quarter. However, some sources are not optimistic about demand recovery as many end users are reluctant to spend.
Availability is ample and production rates are healthy.
Contract
A seller said that €1,280-1,350/tonne FD NWE is a more representative range for third-quarter contracts, following last week's settlement at €1,300-1,390/tonne FD NWE.
There is some expectation in the market that values will stabilise in the fourth quarter as the cost of melamine has decreased by €330-340/tonne since the first quarter.
Production
Methanol Holdings (Trinidad) Limited (MHTL) started its month-long turnaround on 25 July. The 60,000 tonne/year melamine producer is located at the Point Lisas Industrial Estate in Trinidad and Tobago.
Asia
Melamine prices in Asia are stable at $1,500-1,550/tonne CFR NE Asia.
Upstream
The urea market adopted a mood of cautious optimism last week, but continues to lack a clear price direction. The State Trading Company (STC) tender in India created the buoyancy by improving the short term demand outlook, and this has been supported by unconfirmed reports that the minimum export price from China will be raised in August. Accordingly, traders are more reluctant to go short on the basis of Chinese supply.
The firm tendency in the ammonia market continued last week, with further August business being concluded at $490-495/tonne FOB Yuzhny and little product left to sell. Ideas are starting to turn to September, but suppliers are in little hurry to commit tonnes given expectations that prices will rise as August progresses on the back of scheduled maintenance shutdowns impacting availability out of Yuzhny and strong demand for shipments to the US.
($1 = €0.70)
This week in ICIS ( www.icis.com):
02/08/2011 08:07 Japan’s Mitsui & Co posts 33% rise in chemicals fiscal Q1 net profit
02/08/2011 07:56 Formosa to shut cracker as planned amid refinery outage, FM
01/08/2011 10:01 China’s Shandong Hualu-Hengsheng shuts Dezhou units
29/07/2011 15:49 Asia ammonia prices rise on limited supply, good demand
