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MRC news digest over the past week

May 28/2013

MOSCOW (MRC) -- MRC news digest over the past week.

1. EPS prices Ukraine remain steady.

Major suppliers of expandable polystyrene (EPS) to Ukraine keep their price offers for May shipments at April's level. Thus, the Ukrainian producer Concern Stirol (Gorlovka) has kept its quotation at UAH19,300-19,400/tonne, FCA.Russian producer SIBUR-Khimprom has also retained its previous price offer for May shipments, which amounted to USD2,000/tonne FCA Perm. In the Ukrainian market, the price of Perm Alphapor is UAH21,000/tonne with downward and upward deviations depending on quantities of material and terms of payment. Meantime, the Polish producer Synthos has set its price offer at EUR1,460/tonne FCA. In April the value of the Polish polystyrene ranged EUR1,470-1,570/tonne FCA. The price of material is expected to continue to grow in the coming weeks on the back of positive expectations regarding demand for EPS in the Asian region.

2. March imports of PET to Kazakhstan fell by 60%.

In March 2013 imports of PET to the domestic market of Kazakhstan decreased by 60% compared with February. In March imports of PET granulate to Kazakhstan totalled to about 3,400 tonnes, while in February the imports of PET to the region amounted to more than 5,400 tonnes. Cheaper Chinese PET made the biggest share in the structure of the imports, with more than 2,400 tonnes. The supplies of Korean PET made about 1,000 tonnes.According to market players, the reason for decline in imports was the drop in spot prices in Asia and weaker demand in the domestic market, resulting in the cuts of the purchases in China and Korea. At the same time, market players are sure that  April imports exceed the March level.

3. LDPE prices at auction in Belarus remained steady.

Buying activity in the domestic auction for the sale of low density polyethylene (LDPE) in Belarus was high, but in fact all the deals were closed at starting prices. On May 16, there was domestic auction for the supply of high-density polyethylene (LDPE) in Belarus. Buying activity at the auction was high enough, the only exception was the LDPE for shrinkable  film production. Though the demand for LDPE is high in the market, its prices remained almost at the starting level - BRb12.97 - 13.49 m/tonne FCA Novopolotsk, excluding VAT. The negotiation for export prices are scheduled on May, 17.

4. April output of HDPE in Russia dropped by 14%.

In April, Russian producers reduced their production volumes of high-density polyethylene (HDPE) by 14% from March to 76,000 tonnes. The decline in the output was caused by the switch of Nizhnekamskneftekhim to the production of linear low-density polyethylene (LLDPE) in April. In April, all Russian HDPE producers virtually kept the March level of capacity utilization with  the only exception being Gazprom neftekhim Salavat, which increased its production by 21%. Over the past four months of the year, the total output of HDPE in Russia amounted to 341,000 tonnes.

5. Russian exports of HDPE in April grew by 90%.

Russia's exports of high-density polyethylene (HDPE) in April increased by 90% and exceeded 25,000 tonnes. Low demand for HDPE  in the domestic market, coupled with a high level of capacity utilization forced some Russian producers to increase export sales significantly. April exports of HDPE to Russia (excluding the countries of the Customs Union) rose to a record high since the crisis in December 2009 (22,430 tonnes) and made 25,400 tonnes, which accounted about one third of all produced Russian HDPE in April. The leader in export sales of HDPE in April was Stavrolen (Lukoil group). Last month the company shipped to foreign markets about 14,300 tonnes, which is almost two and a half times more than in March. Kazanorgsintez in April almost doubled its March output  - 9,300 tonnes. Gazprom neftekhim Salavat  also increased its activity in the foreign markets. Pipe HDPE made the main volume of April exports - 77%. Film and injection moulding HDPE both made 10% from total exports. About 97% of April exports of Russian HDPE was shipped to four countries: China (63%), Ukraine (16%), Germany and Turkey (9%). In the first four months of this year, Russian producers exported more than 60,000 tonnes of HDPE, from 32,700 tonnes over the same period of time in 2012.

6. North American PVC prices for Russia exceeded USD1,010/tonne.

North American suppliers of polyvinyl chloride (PVC) continue to raise prices for the Russian market. In early May, export prices of North American PVC for the Russian market were in the range of USD950-970/tonne CFR St Petersburg. But already after the May holidays, suppliers of North American PVC began to increase prices gradually. As a result, this week price offers for the resin to be shipped in early June rose to USD1,010-1,040/tonne, CFR St Petersburg. Such a sharp increase in export PVC prices in the US after a slump in March-April made many Russian companies temporarily suspend procurement of the raw material. Excessive import volumes of resin to Russia in March-April and weak demand for finished products allowed to build sufficient stocks of material. Some companies have temporarily shifted to purchases of resin in Europe. In their turn, suppliers of North American PVC expect the rise in export prices to last, at least, till August.

7. Russian imports of PE in April dropped by 7%.

Imports of polyethylene (PE) to Russia in April 2013 fell by 7% to 61,400 tonnes. The decline in imports was seen in the supplies of all PE grades with the exception of low density polyethylene (LDPE). Low demand for finished products and large leftovers of feedstock forced many Russian companies to reduce in April the purchases of polyethylene in foreign markets. In April, imports of high-density polyethylene (HDPE) to the Russian market on the back of excess supply from Russian producers and the low demand for finished goods decreased to 27,000 tonnes.
The largest decrease was seen in the supply of HDPE for extrusion coating of large steel pipes for the production by blow moulding. External supplies of linear polyethylene (LLDPE) in April decreased by 8% compared with March and totalled 18,000 tonnes. Reduction in imports resulted from the low demand for the finished film products and the reopening of LLDPE production by Nizhnekamskneftekhim. Imports of low-density polyethylene (LDPE) in April made to 10,900 tonnes with the import from Belarus, which was close to the March figure - 10,500 tonnes. Imports of copolymers of ethylene and other compositions of polyethylene in April of this year totalled 5,600 tonnes. During the first four months of this year, the total volume of imports of polyethylene to Russia made 236,000 tonnes, up 13% compared with the same period a year ago. Import volumes of linear polyethylene (up 45%) and other copolymers of ethylene and PE compositions (up 49%) increased substantially.

8. Production of rubber and plastic goods in Belarus increased by 11%.

In January - April of this year, production of rubber and plastic goods in Belarus increased by 11.4%. The production of plastic windows and window sills showed the largest increase. Belarusian producers of rubber and plastics have demonstrated a positive trend in the production of finished products this year. Over the four months of this year production of all key products increased, the only exception made the production of plastic doors. According to the National Statistical Committee of the Republic of Belarus, April production of plastic windows and window sills increased to 38,500 square meters, up 16% from April 2012. Production of pipes, hoses and fittings made from polymers in the Republic of Belarus last month totalled 1,340 tonnes. 

9. Russian production of finished products made of polymers goes down.

After February surge Russia's production of finished products made of polymers has been going down since March. April production of polymer products grew only by 2%. In February 2013 the production of finished products made of polymers in Russia grew by 15%. In March, many Russian companies on the back of the weak demand in the domestic market reduced the production of finished products. April production of key goods made of polymers (pipes and films) fell to the lowest level, which reflects the current state of the Russian economy. According to the Federal State Statistics Service, the total production of pipes, hoses and fittings made of polymers in Russia in April totalled 48,100 tonnes, which is 2% more than in March.

10. Ufaorgsintez resumed PP production after maintenance works.

Ufaorgsintez (part of "Bashneft"), Russia's largest petrochemical company, resumed polypropylene (PP) production after a weekly shutdown for maintenance. On Sunday, 12 May, the company stopped its PP production for a scheduled turnaround. Initially the maintenance works were to last for two weeks, but company's employees managed to complete them within a week's time. PP production was resumed on Monday, 20 May.

11. Russian DOP rose by Rb80,500/tonne in the spot market.

By late May, a price rise of feedstocks and limited supply had led to a major increase in the price of dioctyl phthalate plasticizer (DOP) in the Russian market - by as much as Rb80,500/tonne. Some market participants do not rule out further price increases. In late April, Gazprom neftekhim Salavat shut its DOP plasticizer production for a turnaround. In May, the price of one of the feedstocks for DOP production - 2-ethylhexanol - increased by Rb7,000/tonne from April. All these factors have resulted in a serious increase in the price of DOP plasticizer in the Russian market. By late May, spot prices for Russian DOP plasticizer had reached Rb79,000-80,500/tonne, including VAT and delivery. The limited supply of Russian plasticizer made some companies actively buy imported material. Deals for June shipments of Korean DOP were concluded in the range of Rb81,000-82,000/tonne, including VAT and delivery.

12.  Increase in excise duty on beer will result in fall of PET processing volumes in Ukraine.

A three-fold increase in the excise duty on beer will hit the largest consumption market of PET granulate and adveserly affect the production of PET preforms in the country. As reported previously, Ukraine's Ministry of Income proposes to increase the rates of the excise duty on beer almost three-fold - from UAH0.87/liter to UAH2.43/liter. This innovation is provided for by the draft law "On Amendments to the Tax Code and other legislative acts." According to MRC analytics, more than 50% of beer produced in Ukraine are poured in PET bottles. As per Russia's experience, a rapid increase in excise duties on beer will reduce the consumption of the product and market stagnation. The other day, Carlsberg Ukraine's CEO Pyotr Chernyshev also said in his interview to Interfax that in the case of increase in the excise duty on beer in Ukraine, Carlsberg do not rule out the possibility of closing one of the plants in Ukraine.
Author:Margaret Volkova
Tags:PVC, PP, PE, PET, granulate, DOF, LLDPE, EPS, LDPE, HDPE, PET bottles, SNOS (Salavatnefteorgsyntez), /Sibur-Khimprom, Kazanorgsyntez, Concern Stirol, Ufaorgsyntez.
Category:General News
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