MOSCOW (MRC) -- A shortage of polypropylene (PP) has increased significantly in the Russian market by the end of the month because of several reasons. PP prices broke the historical record over the past few years, according to ICIS-MRC Price report.
Scheduled outages for maintenance at Poliom's PP production (210,000 tonnes per year) and Ufaorgsintez (100,000 tonnes per year), which began in mid-August, and disruptions in operations of Tobolsk-Polymer (500,000 tonnes per year) led to a major shortage of propylene homopolymers (homopolymer PP) in the Russian market. Prices of some homopolymer PP grades almost reached a record level of Rb80,000/tonne.
Offer prices of PP have been virtually absent in the spot market since mid-August. Deals were scarce, prices reached unsustainable levels. Deals for raffia grade homopolymer PP reached Rb77,000-79,000/tonne FCA, including VAT. Prices of homopolymer PP were also in a quite wide range: they started from Rb75,000/tonne and reached Rb86,000/tonne FCA, including VAT. Converters said they were forced to buy material at such high prices, because there were no alternatives, besides, they have contractual obligations before buyers of finished products.
Negotiations over September PP prices began in the contract market this week. SIBUR (controls Tobolsk-Polymer, Neftekhimia, Tomskneftekhim and Poliom) announced a price increase of Rb3,000/tonne from August. Other Russian producers (Ufaorgsintez and Nizhnekamskneftekhim) have not yet announced their intentions for next month.
Many market participants said the shortage of PP will continue in the Russian market, at least, till mid-September, until Poliom and Ufaorgsintez reach 100% capacity utilisation. The dificit might last longer, because stronger demand, which was not met in August, is unlikely to be met in September either.
MRC