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2. GOOD PROSPECTS FOR MELAMINE EXPORTS.

Exports of melamine continued to rise despite a decline in price as surplus continued to increase. Melamine is used mainly as a feedstock for melamine formaldehyde, a plywood adhesive. It is also used in melamine moulding compounds, formica laminate, wet strength paper treatment, household materials, panicle board and chipboard industries, and adhesive for electronic industry. With the decline of plywood industry, demand for melamine also declines. The weak demand on the domestic market forces producers to seek to increase exports. Competitive price made help increase exports in 1999 although the price in international market declined. Indonesia has a comparative advantage in the availability of natural gas as feedstock.

Melamine exports rose rapidly from 4,304 tons in 1998 to 25,990 tons in 1999 with value surging from US$ 4 million to US$ 22 million. In 1999, however, export earning dropped 27.2%.

Table - 1 Indonesia's exports of melamine, 1995 - 1999
Year Volume Value
 (tons) (US$'000)

1995 8,174 8,545
1996 3,710 4,506
1997 10,491 12,551
1998 21,788 30,193
1999 25,988 22,022



Source: CBS/Data Consult

Indonesia exports melamine to a number of other Asian countries, Europe and Australia. In 1999, Australia was the largest buyer as shown in the following table.

Table - 2 Exports of melamine and countries of destination, 1998 - 1999
 Tons
 (US$'000)

Country of destination 1998 1999

Australia 3,260 4,159
 4,463 4,398
Malaysia 2,209 3,421
 3,222 3,091
Thailand 562 3,060
 769 2,442
India 597 2,331
 834 1,833
Taiwan 976 1,623
 1,304 1,013
Japang 308 1,328
 350 1,328
New Zealand 726 1,509
 971 1,279
Turkey 440 1,163
 510 925
Belgium 1,596 1,660
 1,683 1,251
Netherlands 4,240 940
 6,322 684
South Korea 308 1,328
 350 1,328
Other 6,855 4,288
 9,726 3,372
Total 21,788 25,988
 30,193 22,022



Source: CBS/Data Consult

Production up

Indonesia's production of melamine has risen in the past 5 years - up 42.6% annually from 16,000 tons in 1995 to 55,000 tons in 1999. The highest annual growth was 116.6% in 1998 with the operation of PT Bumiraya Indochem and PT nusantara Interchem. See the following table.

Table - 3 Indonesia's production of melamine resin, 1995 - 1999
Year Production Growth
 (tons) (%)

1995 16,000 --
1996 17,000 6.3
1997 24,240 42.6
1998 52,500 116.6
1999 55,000 4.8



Source: Department of Industry and Trade/Data Consult

Capacity utilization 42%

The country's production of melamine totaled only 55,000 tons in 1999 or 42% of total capacity of 131,000 tons. Some of the producers are located near urea fertilizer factories. PT DSM Kaltim Melamine is located in Bontang near PT Pupuk Kaltim and PT Sri Melamin Rejeki is located in Palembang near PT Pupuk Sriwijaya.

In 1993, the country was entirely dependent on import for melamine. The country started producing the material only in 1994 by PT Sri Rejeki Melamine. The PMDN company used the technology of Allied Signal Inc of the United States. It is 60% owned by PT kairos Estu Niaga. PT DSM Kaltim Melamine is the second producer of melamine starting operation in 1996. The pMA company has an annual capacity of 50,000 tons. It is a joint venture between DSM Chemicals and Fertilizer BV Netherland (60%) and PT Pupuk Kalimantan Timur (20%) and Barito Pacific Lumber Co. (20%). Most of its production is use by adhesive industry, lamination industry and coating producer. It exports around 50% of its production.

Table - 4 Melamine producers and production capacity
Company Status Location Technology
 process

PI DSM Kaltim Foreign investment Bontang Stamicarbon
 Melamine (PMA)
PT Sri Melamin Domestic invest- Palembang Allied Signal
 Rejeki ment (PMDN) Inc., USA
others
Total

Company Capacity Commencement
 (Ton/tahun) of operation

PI DSM Kaltim 50,000 1996
 Melamine
PT Sri Melamin 61,000 1994
 Rejeki
others 20,000
Total 131,000



Source: Data Consult

Competing with import products

Local products compete with imported products both in price and quality. Imports remain substantial though declining from year to year. Imports peaked at 25,775 tons valued at US$ 38.4 million in 1996. Imports shrank as a result of the crisis to 9,451 tons valued at US$ 9.9 million in 1999.

Table - 5 Indonesia's imports of melamine, 1995 - 1999
Year Volume Value
 (tons) (US$'000)

1995 19,464 25,377
1996 25,775 38,376
1997 15,001 19,919
1998 6,048 9,112
1999 9,451 9,890



Source: CBS/Data Consult

The main suppliers of melamine for Indonesia is Japan followed by South Korea, See the following table.

Table - 6 Imports of melamine by countries of origin, 1999
Country of origin Volume Value
 (tons) (US$'000)

Japan 3,223 3,602
South Korea 2,788 2,622
China 1,328 1,660
Saudi Arabia 840 728
Austria 500 390
Singapore 500 591
Other 272 297
Total 9,451 9,890



Source: CBS/Data Consult
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Comment:2. GOOD PROSPECTS FOR MELAMINE EXPORTS.
Publication:Indonesian Commercial Newsletter
Article Type:Brief Article
Geographic Code:9INDO
Date:Jan 16, 2001
Words:853
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