Rouble devaluation led to LLDPE price drop in Russia

MOSCOW (MRC) - The weakening of the rouble against the dollar, which strengthened in early November, has led to a serious increase in prices of linear low density polyethylene (LLDPE) in the Russian market, despite lower prices in foreign markets, according to ICIS-MRC Price Report.

The Russian market of linear polyethylene is completely dependent on imports and any fluctuations in the dollar exchange rate proportionally affects the domestic prices. Main suppliers in the foreign markets announced a decrease in November export prices, but this factor was offset by the devaluation of the rouble against the major world currencies.

Some Middle Eastern suppliers of LLDPE C4 (butene) announced their price offers in dollar terms in late October. In early November, under the pressure of the rapid growth of the dollar, almost all suppliers had to fix prices in dollars and euro.

This week price offers for Middle Eastern LLDPE C4 with melt flow index (MFI) 3 started from EUR1,550/tonne FCA, including VAT. Most producers in foreign markets under the pressure oil price drop announced decline in November LLDPE prices.

November price offers for Middle Eastern LLDPE C4 were heard in the range of USD1,500-1,540/tonne CFR St Petersburg. Some Middle Eastern producers agreed deliveries from the warehouses in Europe in the range of EUR1,150-1,180/tonne FCA.
MRC

MOSCOW (MRC) - Imports of suspension polyvinyl chloride (SPVC) in Russia decreased by 17% in the first ten months of this year, compared with the same time a year earlier. SPVC imports fell from all regions, except for Chinese producers, who managed to increase their deliveries in Russia, according to MRC DataScope.

October imports of SPVC in Russia seasonally decreased to 33,400 tonnes, compared with 39,900 tonnes in September. Total SPVC imports in Russia shrank to 270,000 tonnes in January - October of this year, compared with 325,600 tonnes year on year. Only Chinese producers because of the low export prices managed to increase their sales of resin in Russia by 38% this year, while imports from other countries fell.

Structure of Russia's SPVC imports in the first ten months of 2014 was as follows.
Imports of Chinese SPVC in October fell to 24,700 tonnes, from 27,400 tonnes in September. Such a high level of supply partly resulted from the postponement of Chinese SPVC shipments from August and September to October. Total imports of Chinese acetylene resin into the Russian market increased to 169,700 tonnes in January - October 2014, from 123,100 tonnes year on year. Steady prices for Chinese SPVC over the several months was the main reason for such high sales in Russia.

Imports of US SPVC seasonally decreased to 5,500 tonnes in October, from 9,000 tonnes in September. Total imports of US SPVC in the first ten months of the year fell to 56,000 tonnes, down 64% year on year.

After the launch of RusVinyl Russian companies do not need buy US resin any more, besides ongoing rouble devaluation increased this trend.
SPVC imports from Europe because of high prices have been quite weak since the beginning of the year. October imports of European SPVC remained at the level of September at 2,300 tonnes. Total imports of European SPVC in Russia increased slightly to 34,500 in the first ten months of the current year, from 33,200 tonnes year on year.

Russia's SPVC imports will continue to decrease until the end of the year. Imports of SPVC in Russia will be under the pressure of the following factors: seasonal decline in demand, increasing production at Rusvinil and rouble devaluation (imported material is on average by Rb9,000-10,000/tonne more expensive than Russian resin).

MRC

MOSCOW (MRC) -- October imports of polyethylene terephthalate (PET) to the Russian market almost halved compared to September and totalled 5,900 tonnes, which is the minimum level in 2014, according to MRC ScanPlast.

The overall PET imports to Russia rose over the first ten months of 2014 by 17% year on year. In general, 172,000 tonnes of PET arrived in Russia from January to October 2014.
PET imports have been falling for the fourth consecutive month. A traditional decrease in demand in the PET market, which is registered in autumn, intensified this year because of large stocks. Back in August and September, converters reduced their purchasing in foreign markets, which resulted in lower shipments in October. Companies were slow to buy material in a falling market. PET prices went down in Asia on the back of lower paraxylene prices. The overall trends in the oil market allowed buyers to predict a further drop in prices of material and to await a more favorable time to start procurement.

In addition, the rouble devaluation has been putting pressure on importers. As reported earlier, in October, Asian material entered the Russian PET market in October, which was bought at USD1,350-1,410/tonne CIF Novorossiysk, excluding VAT. Subject to customs clearance (given the rouble exchange rate from Rb41 to Rb42.5 per USD1) and the payment of VAT, the cost of procurement of such chips could have been Rb68,000-73,500/tonne CPT, including VAT, .

The market situation did not change much in November, the fall in import prices in dollars was offset by the rouble devaluation, according to ICIS-MRC Price report.

MRC

MOSCOW (MRC) - Imports of polycarbonate (PC) for sheet extrusion in the Russian market declined to 22,200 tonnes in the last ten months, down 5% year on year, according to MRC DataScope.

Sheet extrusion sector occurs for 80% from the total Russian PC market, which includes Russian PC from Kazanorgsintez, as well as European and Asian material. Russia's imports of European and Asian PC were 20,400 tonnes (92%) and 1,800 tonnes (8%) respectively in January-October 2014. Last year, PC imports from Europe accounted for 98% from the total volumes, 2% - from the Asian region over the same time.
Imports of Asian material (South Korea) increased over the seasonal peaks in May and September on stronger demand. Traders also built up stock inventories in the low season. At that time, the domestic price of the material was competitive with European PC granules.

In the end of the third quarter price for Asian PC in Russia became close to the price of European material because of the stronger dollar.
This resulted in a reduction of interest from buyers. Seasonal decline in demand in the market of finished products also played an important role.
Converters said that there was no shortages felt in the market, you can easily get the needed volume from the Russian producer.
Kazanorgsintez, the only PC producer in CIS countries, took about 66% of extrusion PC market in Russia. The company increased its market share by 4% over the previous year, having focused on the domestic market and increased production of extrusion grades.


MRC

MOSCOW (MRC) -- The weakening of the Russian rouble against the dollar accelerated in the first week of November. In this situation, many Russian companies refused to buy suspension polyvinyl chloride (SPVC) in foreign markets, according to ICIS-MRC Price report.

Seasonal factors and the start-up of RusVinyl already led in October to a major reduction in purchasing of polyvinyl chloride (PVC) in foreign markets by Russian companies. Tge rapid devaluation of the Russian rouble against the dollar in early November virtually paralyzed all import purchasing of PVC, local companies switched to domestic material.

Chinese producers are the key foreign SPVC suppliers to Russia. They account for about 63% in total imports. Chinese producers still maintained their export prices of acetylene PVC for November shipments in the range of USD810-840/tonne DAP Dostik. Given such prices in China and the dollar exchange rate against the rouble (at 46), prices of acetylene resin, including delivery to the central part of Russia, were at about Rb59,000/tonne, including VAT, up by an average of Rb9,000-10,000/tonne from contract prices of Russian producers.

The situation was similar with the PVC purchasing in the United States. Offer prices for November shipments of North American PVC dropped to USD940-960/tonne CFR St Petersburg on the back of several factors. But prices of North American PVC reached the same level as prices of Chinese material because of the dollar exchange rate.

Such a huge difference in price between Russian polymer and imported material made many companies to completely stop purchasing PVC in foreign markets.
MRC