MOSCOW (MRC) -- Russian producers began negotiations over March shipments of Russian PVC at the end of last week. And, despite the significant devaluation of the rouble and the fall in imports, producers decided to keep February prices for March deliveries, according to the ICIS-MRC Price Report.
The growth of imports in January, a serious drop in prices in foreign markets and low demand forced Russian producers to reduce PVC prices for the domestic market in February. At the same time, the largest price reduction was for PVC with K70. And many buyers were hoping for a continuation of the downtrend in March.
And the last month has radically changed the situation on the market. The significant devaluation of the rouble brought down all hopes for PVC price reduction, but the producers did not rush to conclusions either, and in fact kept the suspension PVC prices for March and February. Demand for March delivery was mixed.
On the one hand, the seasonal factor suggests an increase in demand. On the other hand, because of economic factors, converters do not understand what March will be like. There was no shortage of PVC supply on the market yet, although import volumes have declined markedly in the last two weeks of February.
At the same time, imports are expected to be completely stopped in March on the back of a galloping devaluation.
The Central Bank raised the key rate from 9.5% to 20%, followed by commercial banks on new loans raised rates on average by 25%, mortgage rates also increased. It is highly likely that, taking into account the new interest rates on loans, the demand for finished PVC products will decrease.
So far, the situation with the demand for finished products was mixed. Some companies have planned a slight increase in capacity utilisation for March. Also, some converters reported an increased demand for finished products from their customers, but at the same time limits current sales. Some converters still fear that the new refinancing rates will have a negative impact on the demand for finished PVC products.
The devaluation of the rouble improved the export positions of Russian producers. But so far they prefer the domestic market. Also, the devaluation of the rouble led to a serious increase in the cost of additives for PVC processing. Some buyers have taken a break from additive purchases, which could negatively impact their PVC processing volumes.
At the same time, some large converters reported that they have at least a month's supply of additives to work with.
Chinese producers of acetylene PVC have slightly adjusted export prices this week. There was no real demand from Russian companies because of a serious devaluation of the rouble, the price of acetylene PVC will be at least 15% more expensive compared to Russian counterparts.
In addition, there were serious problems with logistics. Deals for March shipments of PVC with K64/67 were negotiated in the range of Rb170 000 - 177 000/tonne CPT Moscow, including VAT, , for volumes up to 500 tonnes. Prices of resin with K=70 were discussed at an average of Rb195,000-198,000/tonne CPT Moscow, including VAT.