MOSCOW (MRC) -- Negotiations over February contract prices of Russian polyvinyl chloride (PVC) started this week. Producers announced a price increase of Rb4,000/tonne from January, according to ICIS-MRC Price report.
Negotiations over prices of Russian suspension PVC (SPVC) for February shipments to the domestic market began on Monday. Local producers unanimously announced an increase of 7% from January in February contract prices. Converters realized that a price hike could not be avoided, but at the same time they complained that such a price rise was hard enough to accept, given the limited financing.
The possibility of purchasing imported material by converters disappeared in November because of the major rouble devaluation. Even now, when February export prices in the United States and China dropped by more than USD100/tonne to USD740-750/tonne CFR St Petersburg and USD710/tonne DAP Dostyk, respectively, and given the current exchange rate, prices of imported PVC approached Rb70,000/tonne, including VAT and delivery.
Russian converters realize that at the moment there are no alternatives to the local PVC and will have to accept price increases. At the same time, most companies are experiencing serious problems with working capital. Interest rates have risen significantly since December and reached 25% per annum, while to get the credit is quite difficult.
Window profiles producers account for the most deplorable situation. Due to the high quality requirements, many producers of this products use in their production exclusively imported materials (additives, titanium dioxide, etc.). And the rouble devaluation actually doubled the cost of these materials.
Some large converters said they intend to achieve deferred payment for February contract because of issues with the working capital. Otherwise, companies will simply refrain from buying this month.
MRC