MOSCOW (MRC) - Supply of suspension polyvinyl chloride (SPVC) in the Russian market fell by 22% in the first six months of 2014 on the back of significant decline in the demand for finished SPVC products, according to MRC ScanPlast.
Russia's SPVC supplies (production plus imports minus exports) fell to 437,800 tonnes in June, compared to 560,500 tonnes in the same time a year earlier. In part, such a serious decline in demand for SPVC resulted from more cautious procurement policy of many local converters.
However, the main reason was a reduction in demand for finished products in the domestic market. PVC supply in the market decreased by 22%, while demand for finished goods fell not so much. According to preliminary data, demand for finished goods decreased by 7-15% depending on the type of finished products.
At the same time in each of the sectors of consumption, there were companies which, despite the overall downtrend, managed to increase their market share. Such a significant difference in SPVC supply and sales of finished products resulted from several factors. First, more cautious purchasing policy. In early 2013, many Russian companies actively bought PVC in foreign markets in the hope of a serious increase in demand in the season. The resulted in a record high imports of more than 53,000 tonnes of resin in March - April. Experience of the first half of last year, high export prices for US resin, Russian rouble devaluation and difficulties with crediting made many companies to less buy in foreign markets, and some have even stopped buying imports, in particular from the United States. As a result of this factor, producers and converters' PVC stocks have been quite low for several months. Market participants remembered overstocked inventories in the end of last year.
All of these stocks have moved in in 2014 and also led to a distortion of figures. Third, "grey" supply of Chinese acetylene PVC continue to increase. According to some estimates, these supplies may be about 15,000-20,000 tonnes in the first half of 2014. Demand for finished PVC products continues to seasonally increase in July, and it will be high enough in the next months.
But we can say that the total demand for SPVC in 2014 will be negative.
MRC