CHEMICAL PROFILE

feliza.mirasol@icis.com

DATABANK AMERICAS

Melamine
Melamine is used to make molding powder that is used in dinner ware, coatings in cars, fan coils and appliances. Other uses include adhesive resins, which are used for making wood panels for construction of kitchens, bathrooms, furniture and ooring. e construction and automotive industries are strong growth drivers for melamine. Demand for melamine has been fragile throughout the year, with end-markets not yet showing much certainty in recovery, according to global market intelligence service ICIS pricing. Stocks have been low, but downstream demand in September was assessed to have increased from the summer months. Demand in the wood-based panel industry was on the road to recovery, while raw material costs were increasing, particularly for natural gas and ammonia, ICIS pricing noted. Discussions between sellers and buyers are expected to continue well into October before a market consensus would be reached. In addition, both buyers and sellers expressed concern about an additional 30,000 tonnes/year of melamine production that will begin coming into the North American market in the rst quarter (Q1) of 2010. e new capacity would come from US methanol supplier Southern Chemical, which has a new plant in Trinidad for producing melamine. Another 30,000 tonnes of production from this plant is expected to be directed to the European market, said ICIS pricing. e North American melamine market was stable, with sellers and buyers vigorously engaged in discussions for Q4 pricing, said ICIS pricing, citing sources

USES

SUPPLY/DEMAND

during the week ended September 30. In mid-September, US specialty chemical producer Cytec Industries announced a 6 cent/lb ($132/tonne) price increase for Q4, e ective October 1. In the week ended September 30, Cytec and other producers were still pressing forward with the increase. However, buyers protested that an increase of that magnitude (9%) was unjustied, considering that demand had not yet returned to prerecession levels. Melamine buyers in North America said a price increase for Q4 2009 was unwarranted because the market appeared to have adequate supply to meet demand. Although demand had picked up slightly in September, it was nowhere near enough to warrant this price hike, some said. However, margins for melamine need to be restored, one producer has said. Meanwhile, prices for feedstock urea rmed slightly during the week ended September 30, with prices in the US Gulf quoted at $258265/short ton (175179/ short ton) FOB, according to ICIS pricing. Negotiations in Q3 were di cult and competitive, with prices down up to $200/ tonne from Q2. Melamine prices for Q3 were assessed in a range of approximately 7988 cents/lb ($1,744.301,936.98/tonne), according ICIS pricing. In comparison, the price range quoted in Q3 2008 was $2,259.742,414.06/tonne.

US MELAMINE CAPACITY 000 TONNES/YEAR

Company Cytec Industries TOTAL
SOURCE: ICIS PLANTS & PROJECTS

Location Fortier, Louisiana

Capacity 80 80*

*Additional 30,000 tonnes/year expected to enter North American market in Q1, 2010 from Southern Chemical

MELAMINE (US) DOMESTIC BULK: INTERMEDIATE IN US GULF DOMESTIC BULK

cents/lb 130 120 110 100 90 80 70 60 Jan 1, 2007 Sep 1, 2009

SOURCE: ICIS PRICING

TECHNOLOGY

PRICE

Melamine is produced by heating urea, ammonia (NH3) and carbon monoxide. e resulting mixture of isocyanic and ammonia are reacted with a solid catalyst at about 400C (752F). In the high-pressure process, which is carried out in the liquid phase without a catalyst, melamine is manufactured by heating dicyandiamide under pressure. Its most important reaction is that with formaldehyde, forming resinous compounds of high molecular weight.

e economic outlook for melamine is uncertain. It is expected that this years Q3 will have seen higher demand for melamine in the Americas than in Q1 and Q2. All melamine applications were expected to improve in the coming months, with some melamine sources citing auto coatings as a category of growth now that automakers are returning some plants to production. Meanwhile, melamine users in South America have returned to the market, but it was not known whether this was actual new demand or merely stock re lling. One industry source said the laminates market in North America was picking up as a result of homeowners receiving government incentives to remodel, for example in Canada.
Prole (Europe) last published December 1, 2008 For the latest market prices and reports on more than 120 commodity chemicals from the leading independent pricing and market intelligence service, please visit ICIS pricing at www.icispricing.com

OUTLOOK

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MARKET TRENDS & DATA

andy.brice@icis.com

DATABANK

All eyes on industry event

Players ock to the EPCAs annual meeting in Germany. Meanwhile, European MEG buyers push for lower prices, and PX contracts slump in Asia and Europe
POLYOLEFINS
An expected injection of supply into the Asian markets may depress regional prices of polyethylene (PE) and polypropylene (PP) into November and December. Plant start-ups in China and Saudi Arabia between May and September may cause a deluge of supply into the market. e benchmark PP injection and yarn grades have fallen by 9.8% in China and 9.6% in Southeast Asia in the four weeks ending September 25. Benchmark lm grade high density polyethylene (HDPE) fell by 8.6% and 7.4% in each respective region over the same period. Chinas Fujian Re ning and Petrochemical (FREP) and Dushanzi Petrochemical have new PE and PP plants, as does Petro Rabigh in Saudi Arabia. PP injection and yarn grades from FREPs plant are already o ered in East China at CNY8,9009,000/tonne ($1,3021,317/tonne) delivered. Near-prime lm grade HDPE and linear low density polyethylene (LLDPE) from Petro Rabighs plant have been o ered at $1,0701,080/tonne (1,5791,594/tonne) CFR China and $1,110/ tonne delivered in Malaysia.

GAP BETWEEN BENZENE AND STYRENE TO SHRINK

The wide spread between benzene and styrene in Europe is likely to narrow toward the end of the year as destocking gets underway. A gap of about $200/tonne is regarded as protable, although one seller says that a minimum of $300/tonne is needed. In the week ending October 2, the spread had widened to almost $400/tonne, which would be unsustainable towards the end of the year, say market sources. The backwardation on styrene between October and November is more than $100/tonne, adds a styrene buyer. People are already speculating that the market will come off at the end of the year. One styrene producer says: The spread between benzene and styrene will go back to $100200/tonne. The spread between naphtha and benzene is good, and I suspect benzene can come down to the $600700s/tonne. If that happens, styrene can go down to the $9001,000s/tonne. By October 8, the benzene and styrene spread had narrowed to $285/tonne.

Upstream, ethylene was agreed at 860/ tonne for October, a drop of 15/tonne, and is widely expected to fall again in November.

EPICHLOROHYDRIN

MONOETHYLENE GLYCOL

European October epichlorohydrin (ECH) and epoxy resins (ER) contracts have risen by 2050/tonne because of higher feedstocks and sellers e orts to improve pro tability. Sources attribute the increases to higher chlorine values, limited ECH and a push by producers to improve margins. Buyers, howICIS PETROCHEMICAL INDEX (IPEX)
Index, Jan 1993=100
400 350 300 250 200 150

ever, say propylene is a contributory factor. ECH is pegged at 1,2901,360/tonne FD NWE, up by 3050/tonne. Liquid ER prices are at 1,7901,850/ tonne, with solid ER at 1,8401,900/tonne representing a 20/tonne hike.

STYRENE BUTADIENE RUBBER

European monoethylene glycol (MEG) customers are vying for a price drop of over 100/tonne ($148/tonne) for October contracts. Sellers, meanwhile, are seeking rollovers at 670/tonne FD Northwest Europe (NWE). Customers are using Asian spot prices in the mid-$600s/tonne as a reference for their attempts to drop European contracts in October, adding that otherwise it would attract cheaper imported nished goods. If the contract price decreases to 570/ tonne and you take o more for rebates, the price would be very, very low. Its a bit too ambitious, says one reseller.

Sep

SOURCE: ICIS PRICING

2008

2009

Oct

Tire producers are growing keen to procure styrene butadiene rubber (SBR) cargoes from the Asian spot market whittling down their fourth-quarter (Q4) contract volumes as prices continue to fall. e combined e ect of plunging values of feedstock butadiene (BD) and the USs decision to impose punitive tari s on Chinese tire imports has depressed SBR values and may continue exerting pressure on prices. BD prices have plunged by over $200/ tonne to below $1,450/tonne CFR Northeast Asia in the past month. Consequently, non-oil grade 1502 SBR spot o ers have fallen to $1,9001,950/tonne CFR Asia, down more than $100/tonne from early September. Declines in SBR prices have stonewalled negotiations for Q4 contracts.

For daily pricing updates on these and other chemical products g

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ICIS Chemical Business | October 12-18, 2009 | www.icis.com

TOLUENE DI-ISOCYANATE

Toluene di-isocyanate (TDI) values in Latin America have risen by 6 cents/lb, with highpriced imports from Asia pushing market sentiment higher in the region. US export spot TDI, which re ects deals to Latin America, are in a 128133 cent/lb FOB US Gulf range. Numbers in Asia have climbed by 54% since mid-March, while US export spot values have risen by 25% since the middle of April. Sellers looked to price TDI at around $3,200/tonne CIF Latin American port in October.

MARKETS

KEY INDICATORS
ETHYLENE SPOT PRICES
$/tonne
1,100 950 800 650 500 350 200

PROPYLENE SPOT PRICES

$/tonne
Asia
1,300 1,100 900

US

Europe

Europe
Asia

US

700 500

PARAXYLENE

Octobers paraxylene (PX) contract in Europe has been con rmed at 615/tonne FOB NWE, down 145/tonne from September. Given the volatility of crude values over the past few weeks, and the continued slump seen in the Asian PX sector, many players had been expecting a signi cant drop. In Asia, meanwhile, October PX contracts settled $200/tonne below September, in line with weaker spot prices. e Asian contract price stands at $840/ tonne CFR Asia, down from $1,040/tonne. A US October orthoxylene (OX) contract has been agreed down by 2.5 cents/lb from the September benchmark a response to weaker mixed xylenes (MX) numbers. e FOB contract for the US Gulf settled at 37.5 cents/lb, down from 40 cents/lb. A buyer involved in the contracts had targeted a 4 cent/lb fall in October, following producer nominations of 4243 cents/lb. Energy and feedstock prices receded, but not enough to warrant 4-cent concessions, says a contract supplier. US spot MX was at $2.402.45/gal in midSeptember, before dipping to $2.102.25/gal in the week ending October 2.

Oct

SOURCE: ICIS PRICING

2008

2009

Sep

300

Oct

SOURCE: ICIS PRICING

2008

2009

Sep

SPOT BULK CHEMICAL PRICES (* DENOTES NOMINAL RANGE)

Asia $/tonne Naphtha Ethylene Butadiene Benzene Toluene Xylene4 780800 CFR NEA* 1,4001,450 CFR NEA* 735745 FOB Korea* 690700 FOB Korea* 705720 FOB Korea* Change $/tonne Europe Change cents/lb US Change

607.50610.50 CFR Japan* +33.50 582592 CIF*

+10 162165.25/gal DEL* -70 26.7527.25 DEL -35 46.2548.75* +55 8083 CIF* +67.50 $2.582.62/gal FOB HTC -35 $2.102.30/gal FOB* -10 $2.102.20/gal FOB HTC* -112.50 34.4836.29 FOB* -70 3940 FOB* +92.50 45.546.5 FOB USG* -19 7881/gal FOB*

+9.75 -1.81 -7.13 nc -0.05 +0.08 nc -1.47 nc +0.38 -8.5

-60 900950 CIF* +5 740750 CIF* -50 1,6001,620 FOB* +50 780800 CIF +15 680730 FOB* -5 680700 FOB* -15 680695 FOB* -25 680730 FOB* nc 1,0801,115 FOB* nc 195200 FOB nc 780822 FOB* -5 285295 FOB Yuzhny nc 1,0831,128 FD*

Propylene1 900910 CFR NEA*

ORTHOXYLENE

Paraxylene 830840 CFR Taiwan Orthoxylene 830840 CFR NEA* Styrene Methanol MTBE Ammonia Phenol 930940 FOB Korea* 265270 CFR China* 700710 FOB Singapore* 300330 CFR Taiwan 920970 CFR CMP*

+20.50 $2.302.42/gal FOB USG* +0.29

+2.50 $345350/tonne CFR USG -1.50 nc 4954 FOB* -1

CONTRACT BULK CHEMICAL PRICES

Europe /tonne Ethylene Propylene1 Butadiene Benzene Toluene Xylene Paraxylene Orthoxylene Styrene3 Methanol Ammonia Ethylene glycol Ethanol 860 Oct 750 Oct 900 Q4 505 Oct $728735 Oct 615 Oct 615 Oct 829 Oct 223 Q4 6064/HLT US cents/lb 29.75 Jul 57 Sep 68 Oct $2.60 Oct $2.14/gal Oct 51.25 Sep 37.5 Oct 55.558 Sep 9395 cents/gal Oct $345/tonne Oct 3740.5 Sep $3.003.10/gal Sep
Prices contained in this magazine are gathered by ICIS pricing through consultation with producers, consumers and traders across Asia, Europe and the US. They are intended as a guide to price levels of recent business, and reect medium to large tonnage sales. ICIS Chemical Business and ICIS pricing accept no liability for commercial decisions that are based on the market information/ prices reported in this magazine. Abbreviations used are FOB (free on board), CIF (cost, insurance and freight), FCA (free carrier), CFR (cost and freight), DEL (delivered). European contract prices are quoted on a freedelivered basis (FD), unless otherwise stated. Initial, but unxed, negotiating range is indicated (*), na = not applicable, nc = no change, + initial settlement. 1 = polymer grade, 2 = solvent grade, 3 = barge price, 4 = isomer grade Spot prices in this issue are based on information that was available on October 8, 2009. Dollar prices are based on rates of exchange on October 5, 2009: $1=0.685; $1=0.629; 1=0.919

STYRENE

In Europe, the styrene truck customer reference price for October has been agreed down 51/tonne from the month before at 829/tonne FCA Rotterdam. A decline had been anticipated a er the barge contract was heard at 829/tonne FD NWE down by 45/tonne on September.

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