Russia LDPE prices weaker as seasonal supply deficit fails to materialise

MOSCOW (MRC)–There was no major supply deficit in the Russian low density polyethylene (LDPE) market this April, contrary to previous years, with a producer announcing a significant price reduction in early May, according to the ICIS-MRC Price report.

In the past few years, a seasonal increase in demand for film products and scheduled long maintenance at Kazanorgsintez, Russia’s second largest producer, were the main drivers for price growth.

In 2016, a shortage of LDPE in the market was aggravated by a forced outage at Angarsk Polymer Plant due to a failure at its ethylene unit.

With no current supply issues, there was no noticeable price increase in April and in early May prices in fact went down.

Some market participants said there was no seasonal surge in demand for film products partially because of bad weather conditions and also higher imports of finished goods (a serious strengthening of the rouble against the dollar made imports more affordable for consumers).

There has been also a decrease in demand in some sectors of the economy, particularly in the construction sector, since early 2017.

Some converters, conversely, built up additional inventories of polyethylene (PE) in March (before the introduction of restrictions on freight road transportation and the scheduled shutdown at Kazanorgsintez), thereby minimising their risks in April.

Weak demand for LDPE during the spring period was partly caused by lower linear low density polyethylene (LLDPE) prices.

The difference in LDPE prices and those of some LLDPE grades reached roubles (Rb) 10,000/tonne ($159/tonne) and higher, and as a consequence converters increased the share of LLDPE in their procurement portfolio.

A major increase in LDPE prices failed to materialise in the Russian market in April.

Moreover, prices were virtually relatively steady during the whole month, with only Kazanorgsintez’s LDPE growing because of tight supply.

In the second half of April, a slight reduction in prices of 108 grade LDPE began in the market, and by the end of the month traders’ offer prices for this PE grade had reached Rb94,500-95,500/tonne FCA (free carrier) including VAT.

Already in early May, Tomskneftekhim announced a reduction of Rb7,000/tonne from April for its LDPE prices. Other producers have not agreed upon their prices for this month yet.

($1 = Rb62.91)

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