MOSCOW (MRC) -- Negotiations over September shipments of suspension polyvinyl chloride (SPVC) began in Russia between producers and converters last Friday. All producers announced a price increase of not less than Rb5,000/tonne from August, according to ICIS-MRC's Price report.
Back in July, most Russian producers had sufficient stocks of resin, but strong demand for PVC in August led to a major reduction. And in the second half of August, a shortage of PVC already began to be felt in the market because of lower shipments and scheduled and unscheduled outages at Russian plants. Therefore, Russian producers announced an increase of Rb5,000-6,000/tonne from August in September prices. Many converters were forced to accept such a price increase because of the absence of an alternative.
Sshutdowns for maintenance at Bashkir Soda Company and SayanskKhimPlast in July and August were scheduled. Therefore, some converters purchased more than enough PVC in August. But since16 August, Bashkir Soda Company has been forced to suspend production of resin for almost two weeks due to problems with ethylene shipments.
The plant's representatives said, RusVinyl also intends to reduce its capacity utilisation to conduct a short turnaround in September. Kaustik Volgograd will take off-stream its production for a three-week maintenance in the third decade of September.
May accounted for the peak SPVC imports, totalling 11,800 tonnes, after which imports began to decline gradually. Imports of resin were 4,600 tonnes for 20 days of August. Since July, Chinese producers, the key suppliers, have begun to dynamically increase their export prices of acetylene PVC because of the deficit in the domestic market, and Russian companies began to refuse to purchase resin in China.
Prices have started to rise dynamically in China since the second half of July due to internal problems, which led to a proportional increase in export prices for shipments to Russia. Since the middle of the month, PVC purchases of Russian companies have been virtually discontinued because of the disparity of prices in China and in the domestic market, and those quantities that entered the market in August were to cover for debts of local producers for June shipments.
Given export prices, announced by Chinese producers for September shipments, prices of acetylene resin, including the payment of all taxes and delivery to a consumer, will be, at least, at Rb74,000/tonne, which is higher than prices of Russian producers even amid the September price rise.
Some converters said they anticipated this situation and built up additional inventories. These stocks will last until October, and they intend to refrain from purchasing PVC in September. But in most cases, converters were forced to accept the current price increase.
Deals for September deliveries were done in the range of Rb69,000-72,000/tonne CPT Moscow, including VAT, for K=65/67 and for quantities up to 500 tonnes. Deals for K=70 resin started from Rb70,000/tonne CPT Moscow, including VAT, and higher.
MRC