MOSCOW (MRC) - Tight supply of low density polyethylene (LDPE) in the CIS countries continues supported the shortage of the material in the Ukrainian market, despite the weak demand. Rising prices in the foreign markets also put pressure on the Ukrainian market, according to ICIS-MRC Price Report.
The acute shortage of PE films for general purpose has been felt in the Ukrainian LDPE market since October.
Limited supplies of Belarusian LDPE (scheduled maintenance on one of the producer's line), and Russian LDPE (because of the shortage in the domestic market) were the main reasons of the deficit in the Ukrainian market, in particular, of 158 LDPE.
Tight supply and rising prices in the foreign markets led to a serious increase in the price in the Ukrainian market. Price offers for Russian 158 LDPE grew to UAH16,100-16,300/tonne FCA, including VAT in early November. Small volumes of Azerbaijani PE were offered on average at UAH16,000-16,100/tonne FCA, including VAT. Many suppliers said they have already sold all November volumes of LDPE.
Prices for shrinkable LDPE films, which are often more expensive than 158 LDPE, are, on the contrary, lower because of the weak seasonal demand and sufficient supply. Deals were done in the range of UAH15,600-15,800/tonne CPT Kiev, including VAT.
Many market participants do not rule out prices of general purpose films price to rise further on the back of price increase at the main producers from Russia and Belarus. Tomskneftekhim (SIBUR) has already announced LDPE price increase of USD30/tonne for November delivery. The representative of the company said it is more profitable to export LDPE to the Chinese market, where the price reaches the level of USD1,680/tonne CFR China.
There was an action on 4 November in Novopolotsk, where Ukrainian companies were able to contract the Belarusian LDPE by Polymir production. But the prices are hardly expected to be low, because the volumes of 158 LDPE will be small on the back of long-term maintenance works at the plant. Taking into account the current shortage in Ukraine purchasing prices can be substantially higher than the starting prices.
MRC