MOSCOW (Market Report) -- After a short period of the supply and demand balance in July, the Russian pipe grade high density polyethylene (HDPE) market again became scarce in August. Prices continued their upward trend, according to ICIS-MRC Price report.
A shortage of pipe grade HDPE began to be felt in the Russian market back in June, polyethylene (PE) prices began to rise dynamically because of this factor. Local producers managed to balance the situation in July by increasing their production. In the last summer month, the shortage of pipe grade PE began to be felt again in the market, leading to an increase of Rb2,000-3,000/tonne in the first days.
There was a shortage of both natural pipe grade PE and black PE100 in the market. Many sellers said they limit their current sales, as some producers will significantly reduce their output in September.
Thus, Kazanorgsintez traditionally shuts down its HDPE production capacities for a scheduled turnaround, which lasts for several days, in the second half of September. The Kazan producer is virtually the main supplier of black PE100 to the domestic market.
The plant's customers said Gazprom neftekhim Salavat also intends to significantly cut down its production program for pipe grade PE in September.
Russian consumers virtually have no import alternative, these analogues are significantly more expensive than Russian PE. And it is very risky to make purchases in foreign markets amid instability of the rouble exchange rate against the dollar.
In some cases, prices of natural pipe grade PE reached Rb110,000/tonne CPT Moscow, including VAT, this week. Prices of black PE 100 exceeded Rb116,000/tonne CPT Moscow, including VAT.