Russian producers rolled over PVC prices for March

Russian producers began negotiations over March shipments of Russian PVC at the end of last week. And, despite the significant devaluation of the rouble and the fall in imports, producers decided to keep February prices for March deliveries, according to the ICIS-MRC Price Report.

The growth of imports in January, a serious drop in prices in foreign markets and low demand forced Russian producers to reduce PVC prices for the domestic market in February. At the same time, the largest price reduction was for PVC with K70. And many buyers were hoping for a continuation of the downtrend in March.

And the last month has radically changed the situation on the market. The significant devaluation of the rouble brought down all hopes for PVC price reduction, but the producers did not rush to conclusions either, and in fact kept the suspension PVC prices for March and February. Demand for March delivery was mixed.

On the one hand, the seasonal factor suggests an increase in demand. On the other hand, because of economic factors, converters do not understand what March will be like. There was no shortage of PVC supply on the market yet, although import volumes have declined markedly in the last two weeks of February.

At the same time, imports are expected to be completely stopped in March on the back of a galloping devaluation.
The Central Bank raised the key rate from 9.5% to 20%, followed by commercial banks on new loans raised rates on average by 25%, mortgage rates also increased. It is highly likely that, taking into account the new interest rates on loans, the demand for finished PVC products will decrease.

So far, the situation with the demand for finished products was mixed. Some companies have planned a slight increase in capacity utilisation for March. Also, some converters reported an increased demand for finished products from their customers, but at the same time limits current sales. Some converters still fear that the new refinancing rates will have a negative impact on the demand for finished PVC products.

The devaluation of the rouble improved the export positions of Russian producers. But so far they prefer the domestic market. Also, the devaluation of the rouble led to a serious increase in the cost of additives for PVC processing. Some buyers have taken a break from additive purchases, which could negatively impact their PVC processing volumes.

At the same time, some large converters reported that they have at least a month's supply of additives to work with.
Chinese producers of acetylene PVC have slightly adjusted export prices this week. There was no real demand from Russian companies because of a serious devaluation of the rouble, the price of acetylene PVC will be at least 15% more expensive compared to Russian counterparts.

In addition, there were serious problems with logistics. Deals for March shipments of PVC with K64/67 were negotiated in the range of Rb170 000 - 177 000/tonne CPT Moscow, including VAT, , for volumes up to 500 tonnes. Prices of resin with K=70 were discussed at an average of Rb195,000-198,000/tonne CPT Moscow, including VAT.

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Belarusian Polymir, part of JSC "Naftan", had to shut down part of its capacities of low density polyethylene (LDPE) due to problems with the sale of by-products, according to ICIS-MRC Price report.

According to the company's customers, last weekend the Belarusian producer was forced to stop production at the second line of LDPE production (158 PE). The outage is scheduled to last for one month. The second line's annual production capacity is 65,000 tonnes.

At the same time, it should be added that the temporary shutdown of part of the capacity will not affect the supply of PE from the Belarusian producer. There were sufficient stocks. It is also worth noting that Polymir intends to shut the first line of LDPE for a month in May for scheduled maintenance works, the second line will be shut for repairs in June, but at the same time, the shutdown will last a little more than 30 days.

Polymir (part of Naftan) is Belarus' largest petrochemical company, producing a wide range of chemical products, such as low density polyethylene (LDPE), acrylic fibers, products of organic synthesis, hydrocarbon fractions, etc. Polymir was founded in 1968.

The producer uses technologies of the largest foreign companies from Great Britain, Japan, Germany, Italy (Courtaulds, Asahi Chemical Co. Ltd, Kanematsu Gosho, SNIA BPD, etc.), as well as the developments of scientific research institutes and design institutes of the CIS countries.

The plant's annual production capacity is 130,000 tonnes.

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Tecnicas Reunidas and Axens have signed a collaboration agreement to jointly promote carbon capture (CCS) projects and provide integrated solutions from the concept to the handover of the project, based on Axens technologies, according Hydrocarbonprocessing.

The two companies will work together to accelerate the transition to a zero-emission future by helping companies in energy-intensive industrial sectors, such as the chemical, steel, cement and paper industries, to reduce carbon emissions from their assets.

As MRC informed earlier, in January, 2022, SOCAR HQ held a ceremony to sign licensing and design agreements for the fluid catalytic cracking (FCC) unit between the Heydar Aliyev oil refinery (HAOR) and the French company Axens as part of the HAOR modernization and reconstruction project. It is worth noting that SOCAR and Axens have a long-term co-operation. At present, the diesel hydrotreatment, gasoline hydrotreatment and C4 (butane-butylene) hydrogenation units as part of the Heydar Aliyev refinery reconstruction project, as well as the C3 (propane-propylene) hydrogenation unit as part of the reconstruction works carried out at Azerkimya PU, the naphtha hydrotreatment, diesel hydrotreatment and kerosene hydrotreatment units at the STAR refinery built in Turkey are licensed by Axens.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 1,494.280 tonnes, up by 21% year on year. Deliveries of homopolymer PP and PP block copolymers increased, whreas.shipments of PP random copolymers decreased significantly.
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The U.S. took aim at Russia's oil refining sector with new export curbs and targeted Belarus with sweeping new export restrictions, as the Biden administration amps up its crackdown on Moscow and Minsk over the invasion of Ukraine, said Hydrocarbonprocessing.

The new round of sanctions announced by the White House ban the export of specific refining technologies, making it harder for Russia to modernize its oil refineries. The White House also applied a sweeping set of export restrictions levied against Russia last month to Belarus, arguing the controls would help prevent the diversion of items, including technology and software, in the defense, aerospace and maritime sectors to Russia through Belarus.

"The U.S. will take actions to hold Belarus accountable for enabling Putin's invasion of Ukraine, weaken the Russian defense sector and its military power for years to come, target Russia’s most important sources of wealth and ban Russian airlines from U.S. airspace," the White House said. The European Union (EU) also approved new sanctions against Belarus for its supporting role in Russia's invasion of Ukraine, effectively banning about 70% of all imports from that country, the EU said on Wednesday.

The U.S. has steadily increased sanctions on Moscow after Putin began the invasion of Ukraine on Feb. 24. Belarus has allowed Russian troops to use its territory as a staging ground for the assault. The Commerce Department, which oversees U.S. export controls, also said it was adding to a trade blacklist entities with ties to the Russian and Belarusian military and defense sectors, making it much harder for them to receive U.S. technology imports.

In a detailed filing about the new restrictions on Belarus, the U.S. said it would allow mobile phone and software sales to consumers in Belarus, but not to President Alexander Lukashenko, his intelligence staff, the Belarusian military, as well as members of state media and other government officials. The U.S. State Department will also impose sanctions targeting 22 Russian defense-related entities, including firms that make combat aircraft and missiles for the country's military, to "further restrict Putin's war machine," the White House said.

Russia exports between 2 MMbpd and 3 MMbpd of refined products, making it one of the world's largest exporters of fuels. The country has about 5.5 MM bbl of crude refining capacity, according to the U.S. Energy Department, citing Oil & Gas Journal figures.

Russia's invasion has yet to achieve its aim of overthrowing Ukraine's government but has sent more than 870,000 people fleeing to neighboring countries and jolted the global economy as governments and companies line up to isolate Moscow.

As per MRC, ExxonMobil said it will exit a major oil and gas project and cease investing in Russia, making it the latest western oil company to cut ties with the country following its invasion of Ukraine. The Texas-based energy supermajor said it was “discontinuing operations” at the Sakhalin-1 project in Russia’s far east, one of the largest foreign-operated oil and gasfields in the country. Exxon follows BP, Shell and Norway’s Equinor, which have said they will dump stakes in projects and sell out of Russian state-backed energy groups after Moscow was hit with a barrage of western sanctions.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,487,450 tonnes in 2021, up by 13% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market totalled 1,494.280 tonnes, up by 21% year on year. Deliveries of homopolymer PP and PP block copolymers increased, whreas.shipments of PP random copolymers decreased significantly.
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