MOSCOW (MRC) -- High seasonal demand and long-term restrictions on production of pipe grade high density polyethylene (HDPE) at the key producers led to a shortage in the second half of August. Some sellers raised their prices, according to ICIS-MRC Price Report.
Two Russian producers reduced their production of natural pipe grade HDPE in the summer months because of a number of reasons, whereas the demand for polyethylene (PE) is strong due to seasonal factors. On the back of this, supply of material has subsided noticeably in the market by the end of this month, and some sellers increased prices. The situation was aggravated by the fact that there will be long shutdowns for maintenance simultaneously at Russia's two largest HDPE plants - Stavrolen and Kazanorgsintez - in the future.
The key supplier of natural pipe grade HDPE in the Russian market is Gazprom neftekhim Salavat, which shut its production capacities for a one-month turnaround in July. The Bashkir plant finished the scheduled maintnenance works with a grea delay and intends to focus on production of injection moulding polyethylene (PE) from mid-September.
After a long pause in operations, Stavrolen resumed its production of natural pipe grade HDPE in the second half of June, however, production of this PE grade has been discontinued since 12 July due to technical issues. The production of new lots of material is planned in the second half of October after the turnaround.
Kazanorgsintez also reduced its output of natural pipe grade HDPE in July-August 2019 in favour of black PE100, and the Kazan manufacturer intends to start a gradual shutdown of its production capacities for an almost 30-day maintenance on 14 September.
The shortage of natural pipe grade HDPE in the second half of August did not cause a stir in the market, most converters managed to meet their needs for material. Consumers partially switched to purchasing 273-83 grade HDPE and other similar in characteristics analogues. Nevertheless, a price rise could not be avoided.
Small quantities of Salavat natural pipe grade HDPE were sold at Rb106,000-108,000/tonne CPT Moscow, including VAT, last week. Some sellers' offer prices for the Kazan similar material reached Rb110,500/tonne CPT Moscow, including VAT, but there was no information about deals done at such prices.
MRC