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Russian HDPE market: results of 2019

December 27/2019

MOSCOW (MRC) - This year was quite difficult for the Russian market of high density polyethylene (HDPE). HDPE market was oversupplied over the year. Autumn scheduled maintenances of the two largest producers did not affect the balance of the market; the last two months of the year were remembered for a dynamic reduction in prices, said MRC analysts.

2019 was atypical for the HDPE market and rather complicated over the past few years. Excess imports put significant pressure in the first half of the year in the Russian market, as a result of which HDPE was constantly getting cheaper after the record price level that was reached in October 2018. The seasonal factor led to a stronger demand in the summer months and a slight increase in prices.

September shutdowns for repairs of the two largest producers - Stavrolen and Kazanorgsintez did not lead to a shortage, and had only a short-term affect on prices. The oversupply led to lower prices since October, while the dynamics of falling prices intensified in November - December.

2020 will be even more difficult due to the launch of a new production in Tobolsk. The availability of HDPE in the Russian market exceeded demand by 10-12% in the first half of the year, which was mainly due to the growth in imports.

Imports grew by 40% in January - June 2019 compared to the same period a year earlier. The main increase in the imports accounted for for raffia from Central Asia.

It is worth noting that the volume of imports could be even greater if the new plant in Turkmenistan - the Kiyanlynsky Polymer Plant (annual capacity of 386,000 tonnes) worked stably. HDPE prices were on average at Rb110,000/tonne CPT Moscow, including VAT in the Russian market in January for blow moulding  and film polyethylene.

And under the pressure of excess supply, polyethylene prices fell to Rb100,000/tonne CPT Moscow, including VAT and below in y July.
Prices stabilised in the polyethylene market in summer, and the market itself was already more or less balanced in terms of supply and demand.
Moreover, Gazprom neftekhim Salavat shut its facilities for lengthy repairs in July, and some market participants began to prepare for September, when Stavrolen and Kazanorgsintez, with a total capacity exceeding 800,000 tonnes per year, stopped their facilities for lengthy repairs.

The shutdown of the two largest Russian manufacturers in September led to short-term price increases, but it did not led to a shortage.
Some consumers built up additional stocks of HDPE in the period of scheduled maintenances, but to a greater extent the lack of Russian polyethylene was offset by record volumes of imports since 2012.

External deliveries exceeded 30,000 tonnes in July - November, with the exception of October. With the end of turnarounds at domestic manufacturers in mid-October, prices began to go down under the pressure of an increase in HDPE supply.

The dynamics of lower prices for polyethylene increased in November - December. Prices fell below the level of 2018.

It is also worth noting that a new plant, ZapSibNeftekhim, with a total capacity of 1.5 mln tonnes per year, began to produce HDPE in test mode in November. The debut of the new producer was with the production of injection moulding HDPE.

The appearance of natural pipe polyethylene is expected in the first quarter of 2020. In fact, the new producer in its rated capacity exceeds the total capabilities of the existing four manufacturers. There will be a complete reformatting of the Russian HDPE market in 2020,  taking into account new realities and doubling of capacities with an increase in demand by 3-5% per year.
Author:Anna Larionova
Tags:PE, HDPE, Gazprom neftekhim Salavat, ZapSibNeftehim, Kazanorgsintez, Nizhnekamskneftekhim, Sibur Holding, Stavrolen.
Category:General News
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