Quarterly Update on Global Melamine Market
For the Quarter Ending June 2021
The North American region observed a seasonal hike in the Melamine demand outlook as downstream enquiries from the building and construction sector picked up in the second quarter. Spot buyers turned up to replenish the inventory levels ahead of the upcoming hurricane season. Supplies in the North American showed improvement from the previous quarter as the industrial infrastructure recovered from the damages incurred during the winter storm in Q1 and the producers ramped up the operation rates to fulfil the inflow of enquiries. Due to the high demand and limited supplies, Cornerstone Chemicals increased Melamine prices by USD 440.92 per MT in May. The FOB Texas pricing discussion was assessed at USD 2611 per tonne in June.
During the first half of Q2, several Chinese Melamine producers seemed more export oriented amidst tight supply outlook in the Asia Pacific region. Manufacturing facilities in China were operating at higher levels even though the price spread between Urea-Melamine narrowed throughout the quarter due to the rising demand of Urea from the fertilizers sector. A key manufacturer in Japan declared planned force majeure amid the annual maintenance schedule. China’s Melamine demand outlook was majorly driven by the strong trading across the overseas market whereas Indian buyers were observed reluctant to procure large orders amidst pandemic-related uncertainties. In India, Melamine Ex-Works prices were assessed around USD 1366 in June.
Melamine supplies in the European regions were curtailed by a significant quantity, owing to turnarounds at some production facilities in the second quarter of 2021. However, imported Chinese shipments surged in the European market lending somewhat downward pressure to the overall product pricing during the quarter. Several European Melamine producers were heard complaining of deteriorated margins due to ample Chinese imports. Demand surged in the second quarter due to consistent offtakes from the building and construction sector.
For the Quarter Ending March 2021
Melamine supplies were severely tight during the first quarter of 2021 in the North American region, the plant shutdowns in the USA Gulf region due to the unprecedented severe freeze weather conditions which led to the power outages in several production units that hindered the availability of key feedstocks. Demand surged ahead of the better offtakes from the downstream sectors. The regional buyers became more flexible towards the Asian market to procure the commodity which showcased the improved arbitrage from the Asia Pacific region. The prices in the North American region were hiked due to tight supplies and better offtakes from the downstream sectors, followed by high shipping freight charges.
Melamine supplies were ample during the first quarter of 2021 in the Asia Pacific region, as several plants in China and southeast Asian region were heard operating at maximum capacity. During the second half of the quarter, supply constraints prevailed as various plants in China stopped production on account of the Chinese lunar new year holidays. The demand outlook was improved during the first quarter. In February, India extended anti-dumping duty against Chinese Melamine in vanguard of cheap imports. The prices of Melamine in India during March were assessed around USD 1232/ton.
Melamine supplies were short the European region, due to reduced imports from the USA amid bad weather conditions, followed by the transport hiccups which capped the supplies of raw materials. The arbitrage from the Asian suppliers were improved throughout the quarter. In February, Borealis, a leading European company dealing in base chemicals, fertilizers and the mechanical recycling of plastics announced to divest from its fertilizers segment including technical nitrogen and melamine products. Melamine supply-demand gap widened during the quarter due to some shortages which led to surge in prices of product throughout the quarter.
For the Quarter Ending September 2020
Melamine market in Southeast Asia remained dull during the quarter ending September, weighed by the sluggish demand from downstream industries against ample production in China. As China was observed exporting ample cargoes to the neighboring countries, India announced an anti-dumping probe on Melamine imports under the plea by its domestic manufacturers. Furthermore, mounting inventories of feedstock Urea in India, also lent a downward pressure on its prices. Since the overall demand remained uncertain, buyers were seen adopting a wait and see approach depending upon the spot demand. Owing to the sluggish offtakes of the product, its prices in India traced a downward trajectory in Q3 of 2020. Melamine was assessed around USD 939 per MT CFR Mundra.
With several plant shutdowns heard in the Gulf Coast region, following the spates of seasonal Hurricanes, supply of Melamine in North America remained dull throughout the quarter. Likewise, Cornerstone Chemicals, a leading producer of Melamine in the U.S. was seen implementing production turnaround at few of its units in Louisiana as a precautionary measure. However, operations at downstream companies were not severely hindered by the supply shortage as most of them had enough inventories to cater to the spot demand. As per regional traders, Melamine is likely to rebound by the next quarter as the market will be operating at full swing to replenish the sputtering economy.
The European Melamine market remained oversupplied as various Asian countries were seen dumping their cargoes in the region in order to widen export revenues in times of weak domestic demand. Although the demand fundamentals of Melamine remained plagued by the uncertainties caused by Coronavirus, several manufacturers reported a marginal revival in demand compared to the previous quarter. Demand from the construction sector also improved with increase in number of do-it-yourself (DIY) home renovation projects.