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Fire at Stavrolen: consequences for the Russian HDPE market

February 28/2014

Moscow (MRC) - A fire broke out at LUKOIL"s ethylene petrochemical plant Stavrolen, based in Budyonnovsk on Wednesday, 26 February, 2014. Russian market of high density polyethylene (HDPE) immediately responded to such a serious accident, stopping its sales, according to MRC analysts.

Market froze in anticipation of the accident consequences, as all remember a similar accident at Stavrolen in December 2011, which made the plant stay idle for ten months. Many market participants expected HDPE shortages and price hikes.  However, weak demand in the first half of 2012 and high production rates at other producers offset the outage of Stavrolen; the shortage began to be felt only in August-October on the back of scheduled maintenances at Kazanorgsintez and Gazprom neftekhim Salavat, which led to galloping rise in prices.

We can say with high probability that situation in HDPE market will be the same if the plant be shut for long time.
Demand for injection moulding and pipe HDPE is quite weak, with more than sufficient supply. Despite oncoming high season in film HDPE market,  stock inventories at converters are rather large and stronger demand will hardly lead to big prise rise.

Supply of blow moulding HDPE is tight as one of the key suppliers - Stavrolen is shut. The second key supplier - Kazanorgsintez plans to resume production of blow moulding PE in large volumes in the second half of March.

There were offers of PE from Gazprom neftekhim Salavat, but the market participants are not yet get used to this product.

Not to repeat the situation in 2012 Russian producers may change their production plans; Nizhnekamskneftekhim planned to shift to the production of linear polyethylene in March).

We can expect that LUKOIL, in the case of serious consequences in Stavrolen will quickly resume its Ukrainian PE production - Karpatneftekhim.

In general, the first reaction of the Russian HDPE market at Stavrolen"s accidents will be seen on Thursday at electronic trading for March delivery of HDPE from Kazanorgsintez, the largest producer of polyethylene in Russia.
Author:Anna Larionova
Tags:PE, HDPE, blow moulding, injection moulding, Lukoyl, Kazanorgsintez, Nizhnekamskneftekhim, Stavrolen.
Category:General News
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