MOSCOW (MRC) -- By early August the Russian polypropylene market became extremely scarce. Raffia prices beat all the previous records and reached the level of RUB 63.000 - 63.500/mt - according to MRC Price reports.
A number of unplanned suspensions and a long-term maintenance at two plants caused lack of material and another increase in prices. Nearly three weeks of unplanned shutdown at Budennovsk plant in July led to double-ply fall of polypropylene production. Also the production at Ufaorgsyntez capacities was suspended for a few days due to technical problems. Today the plant is operating under capacity. In mid-July Tomskneftehim was suspended for a month-long scheduled maintenance.
All these factors have led to serious raffia deficit in the market. There are small polypropylene volumes offered in the contract market, but there are no offers at all in the spot market. All the volumes are being purchased long before their shipping from a producer. As a result, many converters are decreasing utlization of their capacities due to low stocks. In some cases, raffia prices reach the level of RUB 63.000 - 63.500/mt, FCA.
Anomalous heat in most of the Russian terrtory also influences the situation. In some regions converters faced problems with cargo transportation by car transport . Transport companies refuse to give vehicles or significantly raise transportation prices.
Improvement of the situation in the polypropylene market is expected in the second half of August. Stavrolen is going to resume raffia shippings to the domestic market; Tomskneftehim will also resume production after the maintenance. PP supply from Turkmenia and Ukraine is expected in the middle of the month. By estimate, in August total material supply from these countries is going to exceed 4 - 4,5 kt.
Market experts say that the situation with raffia supply into the market is going to be stabilized only in September.
For more information about Russian polypropylene market please refer to MRC Price reports