Russia’s LDPE prices fall sharply at the end of May

MOSCOW (MRC)–The Russian low density polyethylene (LDPE) market faced an acute shortage and large price increases in April but the situation levelled off in May with prices rolling back significantly by the end of the month, according to ICIS-MRC Price report.

The shortage of LDPE began to be felt in the Russian market in the second half of March. In April, the deficit reached its peak and LDPE prices also reached their new record. 

Demand for polymer subsided in May and, partially because of long May holidays, prices fell sharply in the market in the second half of the month.

The traditional April’s deficit of LDPE in the Russian market was caused by a seasonal increase in demand and a scheduled shutdown for maintenance at Kazanorgsintez, the second-largest producer. 

The shortage of material intensified in the market this year because of an upcoming outage for maintenance and modernization at Tomskneftekhim (the plant has limited its LDPE sales in the domestic market since April, in order to build up sufficient inventories for the period of shutdown).

In mid-April, LDPE prices hit their historical record in 2015, with the price spread being very wide. 

Deals for LDPE were done in the range of roubles (Rb) 114,000-125,000/tonne (€1,558-1,709) CPT (carriage paid to) Moscow, including taxes. Deals for shrinkable film polyethylene (PE) reached Rb127,000/tonne CPT Moscow, including taxes.

The boom subsided in the market in the second half of April, which was partially caused by a record level of prices. Restrictions on road transportation in most regions, which led to higher delivery costs, also made a major contribution in the decline of demand. As a consequence, some converters suspended their LDPE purchasing prior to the opening of roads.

Buying activity had increased in the LDPE market by mid-May as all restrictions on road transportation were lifted, and converters returned to the polymer procurement.

Supply of PE was still tight in the market in the second half of May because of some producers (Tomskneftekhim and Kazanorgsintez), but this factor could not prevent the price roll-back.

LDPE prices have fallen to Rb108,000-115,500/tonne CPT Moscow, including VAT, by end-May. Prices of shrinkable film PE dropped to Rb112,000-116,500/tonne CPT Moscow, including VAT.

At the same time, the current slowdown in the market can not last long. Ufaorgsintez will shut down some of its LDPE production capacities for maintenance in early June.

Tomskneftekhim and Gazprom Neftekhim Salavat will take off-stream their production for a on-month turnaround in the second half of June.

(€1 = Rb73.15)

MRC, a partner of ICIS, produces polymers news and pricing reports from Russia, Ukraine, Belarus, Uzbekistan and Kazakhstan.