Russia PVC producers seek July hikes on shutdowns, higher prices in other markets

MOSCOW (MRC)–Russian suspension polyvinyl chloride (SPVC) producers are seeking higher domestic prices in July because of scheduled shutdowns and a significant rise in foreign markets, according to the ICIS-MRC Price Report.

Negotiations on July shipments to the domestic market began at the end of last week, with producers targeting at least a roubles (Rb) 6,000/tonne ($84/tonne) rise.

Due to coronavirus quarantine restrictions, demand for PVC reduced significantly in April-May, with some converters having to suspend work.

But the situation has changed dramatically since June due to both seasonal factors and the relaxation of lockdowns.

Demand began to recover dynamically while the supply from domestic manufacturers was limited due to two turnarounds. PVC prices also increased significantly in foreign markets.

SayanskKhimPlast (from 8 July for 30 days) and RusVinyl (from 13 July for 14 days), with a total capacity of about 680,000/tonnes plan to stop their capacities in July. The shutdowns were announced in the spring, for the most part, with converters unable to build additional stocks.

Due to quarantines, demand for finished PVC products reduced significantly in April-May and future demand was unclear. Also, converters did not have sufficient financial funds to build up stocks.

Demand for PVC began to grow sharply in various regions of the world, with the largest increase in Asia. Because of this recovery and rising oil prices, PVC began to increase in price in world markets.

In April prices of North American PVC for deliveries to Russia reached $600/tonne, CFR (cost and freight) St Petersburg, and lower, while Chinese acetylene PVC was offered at $685/tonne DAP (delivered at place) Moscow. By June, these prices rose to $780/tonne CFR St Petersburg, and $800/tonne DAP Moscow, respectively.

Demand for PVC from Russian consumers grew significantly in June, with some converters increasing purchases by a third. Buyers were faced with limited quotas from several domestic manufacturers in the first month of summer.

The situation with the availability of PVC from Russian suppliers worsened in July, with some consumers stating they were not able to fully cover all their needs.

Some converters intend to cover their current PVC requirements with supplies from China and Europe.

The prices of the import alternative start from Rb76,000/tonne, including VAT, and delivery, for Chinese acetylene PVC. European PVC was Rb2,000-4,000/tonne more expensive.

Overall, July deals for Russian PVC with K64/67 were negotiated in the range of Rb78,000-81,000/tonne CPT (carriage paid to) Moscow, including VAT, up by Rb6,000-7,000/tonne from June for quantities of up to 500 tonnes.

($1 = Rb71.48)

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