MOSCOW (Market Report) -- Negotiations over August shipments of Russian polyvinyl chloride (PVC) began in the middle of the week. After two months of cuts, local producers still hope to achieve an increase of up to Rb2,000/tonne in August prices of resin, according to ICIS-MRC Price report.
The summer of 2017 turned out to be atypical for the Russian PVC market, contrary to the past years' experience, local producers had to reduce their contract prices of suspension PVC (SPVC) in June-July under the pressure of oversupply and weak demand. The situation had changed in favour of producers by the last month of summer. Negotiations over August contract prices of Russian PVC began on July 26, and many market participants said producers suggested to agree deals up by Rb1,000-2,000/tonne from the previous level.
Scheduled shutdowns for maintenance at two plants work in producers' favour. Thus, Bashkir Soda Company (the plant's annual production capacity - 240 tonnes) took off-stream its production capacities for a two-week turnaround on 15 July. SayanskKhimPlast shut down its production (the plant's annual capacity - 280,000 tonnes) for a one-month maintenance on 24 July. And, although some producers and converters have sufficient stocks of PVC, the scheduled outages at two production facilities will still affect the balance of the Russian market.
The fact of a sharp increase in export prices of acetylene PVC in China and the weakening of the rouble against the dollar was also in favour of Russian producers. Since mid-July, there has been a shortage and an increase in prices of calcium carbide (one of the main feedstocks for PVC production) in China and, as a consequence, a major rise in domestic prices of resin, which affected export prices.
Chinese producers were virtually the main foreign SPVC suppliers to the Russian market this year. Imports reached its peak in May (11,200 tonnes) and were 6,600 tonnes for incomplete July. Prices are expected to go down further in August, as export prices in China made imports of this resin unprofitable.
A slight oversupply of PVC were still felt in the Russian market, but the sport market has already begun to respond to higher prices in China.
Deals for August shipments of Russian PVC were discussed in the range of Rb64,000-66,000/tonne, including VAT and delivery, for deals up to 500 tonnes. Deals for K70 PVC were negotiated in the range of Rb64,000-68,000/tonne, including VAT and delivery.
MRC