MOSCOW (MRC) -- High global prices of suspension polyvinyl chloride (SPVC) and the rouble devaluation for the third month in a row continued to boost prices in the Russian market. Russian producers announced a further price increase of on average of Rb3,000/tonne for November shipments, according to ICIS-MRC Price report.
A shortage of PVC has remained in many regions of the world for the past few months because of scheduled and unscheduled shutdowns of the plants amid strong demand, and prices have broken records for the past few years. And this situation is reflected in the Russian market. In the autumn months, Russian producers virtually maintained their prices of suspension in dollars the same for the domestic market, whereas the weakening of the rouble against the dollar boosted prices for domestic consumers. Russian producers announced a price increase of on average of Rb3,000/tonne for November deliveries.
Demand for SPVC was strong from Russian converters in October, although some consumers still reduced their purchases, in order to optimize resin and finished product stocks. However, even given high level of capacity utilisation of domestic producers, a shortage of PVC supply was registered during the past month.
The similar situation is seen in November. Demand for resin continued to subside from some converters due to seasonal factors, but domestic producers still had insufficient quantities of PVC. And, as a result, some clients, even given lower purchasing, could not fully meet their November needs for material.
The shortage of resin from Russian producers in the past few months was caused by two factors. Firstly, high PVC prices in foreign markets led to a major decrease in imports in October-November. And in December, one should hardly expect a significant drop in global PVC prices.
Secondly, Russian resin was in high demand from consumers from other regions. And prices for shipments to some export directions exceeded those for the domestic market, even given the November increase. As a consequence, some producers have been gradually increasing their export sales of PVC.
In general, the current situation with the rise in PVC prices in October-November is typical neither for the Russian market, nor for the world market. Buyers were used to the fact that in the previous years, prices had been gradually going down since September until the end of the year. But now there is simply no alternative to Russian resin.
Negotiations over November shipments of Russian PVC began at the end of last week, with Russian resin with K64/67 being negotiated in the range of Rb86,000-89,000/tonne CPT Moscow, including VAT, for quantities of less than 500 tonnes. Traditionally, already for the past few months, resin with K=70 has accounted for the acutest shortage.
MRC