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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. |
