Guangzhou China Nov. 11, 2010 - Overseas market is important for China's melamine industry, as 20%~30% of melamine output is exported annually. Influenced by the economic crisis in 2008, the melamine export reduced 31.86% in 2009. However, it recovers in 2010, up 19.08% in the first three quarters. The increasing trend in export may continue in the next few years.
Firstly, in recent years, the domestic capacity of melamine has enlarged fast. Between 2007 and 2009, the annual added capacity is 0.1 million t/a. In 2009, the capacity was 1.05 million t/a, which is obviously superfluous in domestic market, under this circumstance, overseas market becomes more and more important.
Secondly, China's melamine industry is competitive in the cost. Among 1.05 million t/a capacity, about 60% adopts coal as raw material whose cost is lower than natural gas overseas. Besides, the labor cost and environmental cost are also lower than overseas. In Oct. 2010, domestic melamine price is about 500USD/t lower than that in USA.
Thirdly, few European producers reduce their output due to the inefficient raw material supply or equipment failure in 2010. Though global melamine demand reduces and the export destination of melamine is the Southeast Asian, supply reduction of European producers is good for China's melamine exporter.
Source: CCM International