18 January 2006

Melamine in America

ZA Puławy SA has concluded a long-term melamine distribution agreement with Comexport, a company operating in South American. The melamine from Puławy will be marketed in Brasil as early as this quarter (to date, Brasil has chiefly purchased ammonium sulphate from Puławy). This half-year, ZA Puławy SA will increase its annual melamine production capacity by over four thousand tonnes. The agreement was concluded as part of the process of establishing the Company’s position on the new, highly prospective markets.

Entering the South American market is a new element of our global participation in the melamine market. As the third largest producer of melamine, we want to stay in touch with the fastest growing markets for the product – said Mr Zygmunt Kwiatkowski, President of ZA Puławy SA’s Management Board.

The South American market is growing at a rate of nearly 6% p.a., while the total melamine production in both Americas is lower than that of ZA Puławy SA. Melamine consumption on these markets is estimated at approx. 120,000 tpa.

In the view of Mr Paweł Jarczewski, Director of Sales at ZA Puławy SA, the agreement concluded with Comexport (a long-standing business partner of ZA Puławy SA) offers the Company an opportunity to be up to date with the South American market.
 
Having access to such an attractive market, we will be able to optimally shape our sales and pricing policy, which will have a bearing on our investment strategy for melamine. We are diversifying our position of the major market player and promoting the good image of melamine from Puławy, generally recognised as a product of top quality. The market is to a large extent shaped by us and this fact is corroborated by the recent actions undertaken to curb the monopolistic tendencies of our competitors. In a joint effort with our partner, we also intend to promote melamine as a product for versatile use on the South American market – stated Mr Jarczewski.

Melamine is a product of strategic importance for ZA Puławy SA. Together with Eurotecnica, the Company is carrying out a unique project of recovering melamine from condensates produced in two new plants (Melamine Recovery Unit), which will enable ZA Puławy SA to expand the annual melamine production capacity by over four thousand tonnes (up to ca. 96 thousand tpa). ZA Puławy SA is the sole producer of melamine in Poland and the third largest in the world. The two largest melamine manufacturers are DSM Melamine and Agrolinz Melamine International; melamine is also produced by BASF, Nissan Chemical and Mitsui Toatsu Chemical. With the current production capacity at 92 thousand tpa, ZA Puławy SA maintain a 10% share in the global melamine market and an approx. 20% share in the European melamine market.

In the last financial year (2004/2005), melamine sales represented approx. 19% of the total sales volume, generating revenue of PLN 376m. In the last 15–20 years, the global consumption of melamine has doubled. The growth of demand for melamine is expected to remain at 5.7% over the next five years. The rising demand for the product is chiefly a consequence of higher production of laminates and use of melamine for other purposes, for instance, in the car industry.

For more information:  Marek Sieprawski Public Relations Specialist - Coordinator Phone: +48 81 887 62 01 Mobile: +48 607 045 318 Fax:      +48 81 887 53 72 E-mail: msieprawski@azoty.pulawy.pl