MOSCOW (MRC) -- Negotiations over May shipments of suspension polyvinyl chloride (SPVC) to the domestic market began in the Russian market in the mid of last week. After a sharp rise in prices in April, domestic producers had to decrease prices in May more substantially, according to the ICIS-MRC Price Report.
Last month, amid a significant weakening of the rouble against the dollar, high prices in foreign markets and low stocks, Russian producers managed to increase the contract prices of PVC for supplies to the domestic market by Rb6,500/tonne and above. But by mid-April, the situation had radically changed due to the coronavirus pandemic. There was a significant reduction in prices in foreign markets, and the demand for PVC declined by Russian producers. As a result, price reductions of Rb8,000/tonne are being discussed for May deliveries. per tonne or more.
The quarantine restrictions introduced by local authorities in April led to a reduction in demand for finished PVC products by 20-50% depending on the segment. Some converters, including large ones, had to suspend their work for a while. Also, an unusually high demand in March led to a reduction in demand for finished products in April.
Some converters had to limit the volume of purchases of PVC in April and reduce capacity utilisation. Someone shifted to work exclusively for current orders for finished products, without building up stocks. The coronavirus pandemic also led to a dramatic change in the price situation in foreign markets.
PVC prices in the US fell by more than USD200/tonne. Producers from Europe and China reduced their export prices by more than USD100/tonne.
Kaustik Volgograd shut its 90,000 tonnes/year PVC capacities for the turnaround from 1, May to 21, May. RusVinyl postponed scheduled repairs from April to July. Many converters intend to limit their purchases of PVC in May, but because of the series of May holidays, it is still difficult to assess the real reduction in demand.
The picture in the second half of the month will become more understandable. Despite a serious reduction in prices from domestic producers, some converters are considering the possibility of purchasing PVC in foreign markets.
According to them, the imported alternative is still cheaper than Russian PVC.
At the same time, there are still few such converters who are considering the possibility of external procurement.
Overall, deals for May shipments of Russian resin with K64/67 were negotiated in the range of Rb71 000-83 000/tonne CPT Moscow, including VAT, for quantities of less than 500 tonnes. PVC with K70 was offered by Rb1,000-2,000/tonnes higher.
MRC