Earthquake affects melamine prices in Asia in the third quarter

A major European producer said on May 20 that due to the Sichuan earthquake, the supply of urea as a raw material was tight and the price rose, and the contract price of melamine in Asia rose by about 20% in the third quarter. The price has been raised at least 300 US dollars / ton, rose to 1900-1950 US dollars / ton (Asian cost plus freight).
The manufacturer said: "The price of urea has risen by about $300/ton since April. We have no choice but to raise the contract price of melamine in the third quarter by at least $300/ton due to the rise in urea prices. ""
He also said: "Because of the earthquake, China's urea supply has been reduced and supply is tight. We have heard that after the 8.0-magnitude earthquake hit China last Monday, the price of urea has risen to $700/tonne (China FOB price). .
A Middle East producer said at the 76th International Fertilizer Industry Association's annual meeting in Vienna, Austria, that there was a record of 695 U.S. dollars per ton compared to urea.
Sichuan Province has a lot of chemical fertilizer companies and this time suffered a major earthquake. Two chemical fertilizer companies collapsed in the earthquake. As a preventive measure, some ammonia, urea, and melamine plants have ceased production. In order to avoid potential accidents, the Chinese government ordered the device to stop.
An earthquake occurred in Sichuan on May 12 and the epicenter was in Wenchuan County. The earthquake was the largest earthquake in China in more than 30 years.
On May 19, the official reported death toll had reached more than 34,000, and the final number was estimated to exceed 50,000. From the perspective of losses, this major earthquake destroyed 14207 companies worth 67 billion yuan (US$9.4 billion).
The user suffers from a significant increase in melamine prices, and there are indications that, at a certain point, the spot price may rise to $2,000/ton (Asian cost plus freight).
According to one manufacturer, melamine in small batches has been purchased at US$ 1975/tonne, and users themselves do not rule out the possibility of prices reaching US$ 2,000/ton in the third quarter.
A large user said: "Although the impact on prices may not be direct, but in view of the substantial reduction in urea supply, we are prepared to respond to the sharp increase in prices in the third quarter."
Now China's spot melamine shipped in June has risen to 1650-1700 US dollars / ton (China's FOB price), since the beginning of May has risen about 100 US dollars / ton.
Japan's big melamine makers had previously considered raising the contract price in the third quarter by US$200/ton, referring to 1,800 to 1,850 US$/ton (Asian cost plus freight), but given that the price of urea soared, they were facing the market. Rethink the situation.
One Japanese manufacturer said: "We have to reconsider the market situation. If we need to increase prices and possibly raise prices, we will increase the contract price of melamine in the third quarter by 300 US dollars/ton, and we will mention it at 1900-1950 US dollars per ton ( Asian cost and freight rates).
Due to tight supply, coupled with an ever-increasing trade surplus with Western trade and restrictions on exports, in July last year, the Chinese government reduced export tax rebates for many chemicals. Due to these factors, the spot price of melamine has been rising since last year.
The export tax rebate for melamine has been reduced from 13% to 5%, causing China's exports to the international market to decrease.
At present, there are various claims in the market that the 5% export tax rebate for melamine may be cancelled, but it has not yet been confirmed by the management department.
Another reason for the increase in melamine prices was the recent increase in urea export taxes by 100 percentage points. After reaching 135%, urea prices soared.
This policy implemented by the Chinese government took effect from April 20 to September 30 to ensure the availability of urea during the busy season in China.

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