MOSCOW (
MRC) -- Prices of polypropylene (PP) have been growing in the Russian market since early January on the back of situation in the foreign market. In the first week of February, prices for some grades of PP reached record levels, according to the
ICIS-MRC Price Report.
In the previous years, PP prices became cheaper in January-February in the Russian market due to low seasonal demand and oversupply. The situation in the first two months of this year was completely different. High PP prices in some regions of the world and, as a result, a good export offers put serious pressure on PP prices in Russia.
Since the beginning of the year, prices of homopolymer PP have increased by more than 10%. European PP prices increased by more than EUR300/tonne in November-January, European producers intend to raise their February prices further. A similar situation is on the market in Turkey, during the same period the price of polymer increased on average by USD260/tonne.
It is the rapid rise in PP prices in a number of regions of the world in the past few months that pushes the largest producers to increase prices in the Russian market. Some Russian producers contract homopolymer PP for shipments to Europe at EUR1,150-1,170/tonne, FCA for February shipments.
Which is higher than the price level in the Russian market, even given the increase in early February. A week earlier, negotiations on February supply of polypropylene started in the spot market; some small sellers have volume restrictions. In particular, the supply of polymer produced by Ufaorgsintez is temporarily limited.
Due to the fire, Ufaorgsintez had to temporarily reduce the capacity utilisation. The import of polypropylene from Turkmenistan also decreased. Spot offers for the supply of homopolymer PP raffia in the first days of February started at Rb113,500tonne CPT Moscow, including VAT, whereas at the beginning of January the price of this PP did not exceed Rb104,500/tonne CPT Moscow, including VAT.
Some sellers of homopolymer PP raffia rose to Rb118,000/tonne CPT Moscow, including VAT this week. The situation is similar in the propylene copolymer market, with the greatest shortage seen in the injection moulding propylene copolymer segment.
Demand for PP subsided significantly is early February, many converters found it difficult to quickly accept new prices primarily because of the difficulty of passing the new cost of material to finished products.
MRC