MOSCOW (MRC) -- There was a shortage of some low density polyethylene (LDPE) grades in the Russian market in August, which led to a price rise. The shortage of LDPE will remain in September, according to ICIS-MRC Price report.
There was a major surplus of LDPE, which put pressure on prices, in the Russian market in the first half of the year. The market situation changed in July due to scheduled shutdowns for maintenance at three plants simultaneously, from surplus, the market became deficient in some segments. LDPE prices began to go up in July on the back of tight supply, the upward price trend continued in August.
In early July, Gazprom neftekhim Salavat and Angarsk Polymers Plant, whose capacities are 45,000 and 80,000 tonnes per year, respectively, shut down their LDPE production capacities for scheduled turnarounds. Tomskneftekhim took off-stream its production for maintenance in the middle of the month, the plant's capacity reaches 240,000 tonnes per year. Kazanorgsintez reduced its LDPE capacity utilisation because of a shortage of ethylene.
At the same time, the simultaneous outages at three plants affected only the balance of the cheap LDPE segment (108 grade). By early August, the bulk of supply of 108 grade polyethylene (PE) in the market was from Ufaorgsintez, and prices started on average from Rb86,000/tonne FCA Ufa, including VAT.
In mid-August, Angarsk Polymers Plant's LDPE offer prices appeared in the market; on average, prices started from Rb82,000/tonne FCA, including VAT. But because of technical issues, the resumption of PE production in Angarsk after maintenance had begun only by the beginning of the current week. And many sellers said they had already sold out all their August quotas.
Ufaorgsintez will shut its production capacities for a one-month turnaround in early September. Kazanorgsintez will also still have restrictions on LDPE production, and the Kazan producer will take off-stream some of its production capacities for a 24-day maintenance on 26 September.
Thus, supply of 108 grade LDPE will remain tight in the Russian market in September, which may put pressure on prices.
MRC