Editor Madelon Ten Cate, madelon.tencate@icis.com

 NOTE: For full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.

Price ideas for European second quarter melamine prices were becoming clear this week, with several consumers stating they would be looking for a decrease or a rollover at worst, while at least one seller proclaimed that a pick up in demand would justify an increase.

Most buyers agreed that demand was expected to be weak in the second quarter. One source said that its buying interest had decreased by 20% compared to the beginning of the year, adding that January had already not been that strong.

The buyer said that it appeared that the price hike in the Q1 contract prices was not accepted by market players.

Other consumers agreed that consumption for Q2 was expected to be low. One source said it was currently only consuming around 50% of its full potential, adding that its stock levels were also plentiful.

One buyer said it had received offers for European material in the low €1,000s/tonne on an FD basis, or below the current contract price, which indicated that producers also had plenty of stocks available.

Producers, on the other hand, were likely to target price hikes in Q2. One seller said that, based on an anticipated pick up in demand and relatively low stock levels, caused by recent production issues, it would be justified for the Q2 contract price to see an increase.

It was also unlikely for competition out of the new regions like Trinidad and the Middle East to have an impact on supply in Q2 already, which led customers to believe that sellers would push for a higher number one last time.

No imports were noted out of Asia either, with several sellers stating that the strong dollar made it even more difficult for other regions to be competitive.

In the Chinese export market, spot prices were kept steady at $1,200-1,260/tonne FOB China. Demand from most downstream segments was described as healthy, and energy prices were trending up.

In the domestic spot market, numbers were heard between the low €1,000s/tonne, to current contract pricing, and levels were kept stable pending further confirmation. The imported market was also unchanged.

Upstream, the ammonia market was awaiting news on the Tampa settlement for March, which was agreed at $450/tonne CFR, up $85/tonne from February. Spot Yuzhny prices also moved up this week, with sales for March reported at $370/tonne FOB. Producers were reportedly offering around $400/tonne FOB, but these levels were yet to be tested. However, with the new Tampa price for March, the next round of business was likely be at these levels.

Urea prices rose in the East and fell in the West this week. Very wide price differentials opened up, which will have to narrow during March. Black Sea urea traded down to $270-275/tonne FOB, while Middle East and Indonesian producers sold at increased prices in the $330s/tonne FOB.

($1 = €0.74)

This week on ICIS news ( www.icis.com):

03-Mar-10 07:25 Tata Chemicals expects low urea output on converter shutdown

01-Mar-10 12:05 Industries Qatar's 2009 net profit falls 33% to $1.3bn

26-Feb-10 17:56 Zaklady Azotowe Pulawy sees chemicals recovery in its Q2 results

24-Feb-10 23:10 US home remodelling triggers rise in melamine market