MOSCOW (MRC) - Russia's supply of polypropylene (PP) improved in the Russian market in the first half of April, and this factor halted the dynamic price growth that began in January. The increased supply will lead to price cuts in the second half of April. Also, the situation in foreign markets began to put pressure on PP prices in Russia, according to the ICIS-MRC Price Report.
Russian converters faced a limited supply of polypropylene from local producers in the first three months of the year.
The dynamic growth of polypropylene prices in Europe and Turkey also had an additional impact on the market.
As a result, PP prices had dynamically increased during this period and by the beginning of April it reached record levels.
But already in April, the supply of polypropylene on the Russian market increased, including from the largest seller.
Prices began to decline in Turkey, and there were also offers for the supply of polypropylene from Asia. And all these factors led to the beginning of the decline in PP prices in Russia.
Some Russian converters could not fully replenish their inventories of polypropylene in the first three months of the year due to lack of supply in the market. And the dynamic rise in prices further limited the ability to replenish stocks due to the limited working capital.
It is also worth noting that the situation with PP in Europe and Turkey had an additional affect prices in Russia; export prices of Russian polypropylene for shipments to these regions exceeded domestic prices in Russia. By the beginning of April, the situation with the availability of polypropylene in the Russian market had changed, the supply increased from the largest seller, while some converters limited their purchases.
Restrictions on purchases was a result of problems with working capital and hopes for an early decline in prices.
At the same time, the situation with prices in Turkey began to change, and Russian companies also began to receive offers for PP supplies from Asia, including China.
The growing supply of polypropylene in the market, low demand and cheap offers for imports, albeit with a rather long delivery time, began to put downward pressure on polypropylene prices in Russia. So, if at the beginning of April the prices of homopolymer PP significantly exceeded the level of Rb180,000/tonne CPT Moscow, including VAT at a number of sellers.
At the end of the month, some sellers cut their prices below the level of Rb170,000/tonne CPT Moscow, including VAT. At the same time, it should be noted that in the propylene copolymer market, the lack of supply of polypropylene remained during all April. And only for the May shipments, some sellers announced a slight price cut.
And some of the sellers practically rolled over April prices of propylene copolymers for May.
MRC