Negotiations on the June contract prices of Russian suspension polyvinyl chloride (SPVC) began at the end of last week, but many market participants were slow to agree on the deals. Negotiations have continued this week, and buyers reported a further decline in PVC prices for July delivery.
This is atypical for the summer period, as in previous years the summer months brought a serious increase in the cost of PVC. The main reason for such the situation in the market is an excess of PVC supply.
According to preliminary data, the supply of resin in the market exceeds current demand by 20%. Some Russian producers increased exports in June in order to balance the domestic market. Russia’s PVC exports without taking into account the countries of the Customs Union exceeded 4,200 tonnes of PVC in June against 1,500 tonnes a month earlier. Some market participants said they do not rule out the fact that the market situation might change drastically in the near future.
Due to the devaluation of the rouble against the dollar, imports of acetylene PVC from China are no longer as attractive as before. Russian companies have already reduced purchases of Chinese acetylene PVC.
Two major producers plan to shut for scheduled maintenance works in the second half of June. Bashkir Soda Company intends to shut its capacities for two weeks turnaround from 15 July; SayanskKhimPlast for a month long turnaround from 20 July. The annual PVC production capacity at these two plants is 520,000 tonnes.
The demand for PVC in the market has been gradually growing from month to month, but the growth is not as dynamic as the growth in supply of raw materials. SPVC supply in Russia grew by 11% in the first four months of the year compared to the same time of 2016. The excess in PVC supply began to be seen in April, when the import of acetylene PVC from China began to grow dynamically.
Deals for July delivery of Russian resin were discussed in the range of Rb63,000-65,000/tonne CPT Moscow, including VAT for deals up to 500 tonnes. Deals for K70 PVC were discussed in the range of Rb63,000-66,000/tonne CPT Moscow, including VAT.
MRC, a partner of ICIS, produces polymers news and pricing reports from Russia, Ukraine, Belarus, Uzbekistan and Kazakhstan.