MOSCOW (MRC) -- Negotiations over August contract prices of Russian polyvinyl chloride (PVC) began this week. Local producers announced price increases of up to Rb75,000/tonne on the back of an acute shortage, according to ICIS-MRC Price report.
Negotiations over contract prices of Russian PVC for the next month's shipments traditionally begin in the last week of the current month. This week was no exception, active negotiations over August prices have been held since Monday. Supply of resin is tight in the market because of the outages for maintenance simultaneously at two plants-producers, and producers intend to achieve another record price level on the back of a major deficit.
Bashkir Soda Company (from 6 August for 20 days) and SayanskKhimplast (from 9 August for 30 days) will be forced to shut down their production for maintenance in the last month of summer. These plants does not have their own ethylene production (one of the two basic feedstocks for PVC production) and are forced to adjust their shutdowns for maintenance with ethylene suppliers: Angarsk PP, Ufaorgsintez and Gazprom neftekhim Salavat.
Since last November, the rouble devaluation has led to a more than 10-fold reduction in imports. The September launch of the new PVC plant in the Nizhny Novgorod region - RusVinyl - also affected imports. Imports of suspenstion polyvinyl chloride (SPVC) to Russia totalled 11,300 tonnes in Q1 2015, whereas the last year's figure was slightly more than 55,000 tonnes. The situation with imports of resin did not change much in July, the current weakening of the rouble against the dollar added risks.
Tight supply of PVC in the Russian market began to be felt back in late June, but the delay of a scheduled outage for maintenance at Bashkhir Soda Company (the shutdown was initially planned for the the last week of August for 14 days) exposed the problem with the material availability even further.
It was quite difficult for local PVC converters to increase contract prices in July. Prices rose by Rb4,000-5,500/tonne from June and were in the range of Rb64,000-68,500/tonne CPT Moscow, including VAT. Prices for August shipments were negotiated in the range of Rb70,000-75,000/tonne CPT Moscow, including VAT. At the same time, many converters said they were unable to agree shipments even at such record prices because of the absence of resin at the plants, particularly, at SayanskKhimplast and Bashkhir Soda Company.
MRC