MOSCOW (MRC) -- Demand for bottle grade polycarbonate (PC) decreased from January to October 2014 by 11% year on year to 2,500 tonnes, according to MRC ScanPlast.
The main reason for weaker demand was the devaluation of the national currency. Firstly, it led to increases of domestic PC prices, as this segment is 90% dependent on imports from the Asian region. Traders and converters have been losing their margins. The rouble depreciation also resulted in a drop of buying activity in the market of finished products. Consumers are not yet ready to accept the price increase.
Thus, now we have a situation when PC supply exceeds demand. It is rather difficult to sell stocks from warehouses. Converters reported a further reduction of consumption next year if the situation with the exchange rate remains the same.
Asian PC makers made concessions to the market in this situation and reduced their export prices for the Russian market by USD150/tonne in October and November. Thus, prices of bottle grade PC granules in the eastern ports of the country were at USD2,600/tonne, excluding VAT. Despite this, domestic prices did not allow some converters to overcome the breakeven point and to continue operations.
Buyers faced a situation when in some cases prices of European material were lower than prices of Asian PC, because of the dollar strengthening in the world market. About 190 tonnes of bottle grade PC granules arrived in the Russian market from Europe at the end of the third quarter. Traders said they would not be able to sell these quantities until late 2014.
MRC