MOSCOW (MRC) -- Seasonally stronger demand and tight supply have led to higher prices of pipe grade high density polyethylene (HDPE) in the Russian market. Prices of pipe grade polyethylene (PE) had risen by mid-month by Rb2,000-3,000/tonne from May, according to ICIS-MRC Price report.
Russian producers announced an increase in June contract prices of pipe grade HDPE on the back of stronger demand. At the same time, limited working capital of most pipes producers and a serious competition in the finished products market were major constraining factors in pricing of pipe grade HDPE in Russia.
Demand for pipe grade PE pipe grew in June. Upcoming scheduled outages for maintenance at Gazprom neftekhim Salavat (in July and August) and at Kazanorgsintez (in September and October) only heated the situation in the market. Some Russian pipes producers were still trying to build up inventories, despite the total lack of working capital and a low number of orders.
Deals for Russian natural PE100 were done in the range of Rb75,000-78,000/tonne FCA, including VAT, in the first half of June, while deals for coloured PE100 started from Rb79,000/tonne FCA, including VAT, depending on the terms of payment and quantaties. Prices of imported material rose to Rb85,000/tonne FCA, including VAT.
Weak demand for plastic pipes has led to a serious increase in competition among producers in recent years. The upward price dynamics for PE pipes is far behind the cost of its feedstock. Thus, there are still prices for PE pipes of small and medium diameter in the range of Rb86/kg FCA, including VAT, in the market, while prices of the feedstock -coloured PE100 - have come close to this level. The factor of a high competition in the finished pipes market is a serious constaint for price increases of pipe grade HDPE in the Russian market, and this trend will continue until the end of the year.
As reported earlier, demand for plastic pipes has been subsiding in the Russian market for the second consecutive year. According to official data of Rosstat, the overall production of plastic pipes in Russia fell to 198,000 over the first five months of 2014, down by 12.6% year on year. Last year's output totalled 586,400 tonnes of plastic pipes, down by 17% compared with the same figure of 2012.
mrpclast.com