In the Russian market of high-density polyethylene (LDPE) has traditionally been in the last few years there has been a deficit in the first month of spring and, as a consequence, the rise in prices. In April, the situation with the lack of proposals will increase, according to a price review ICIS-MRC.

Over the past few years during the spring months in the Russian market is formed shortage of LDPE. This state of affairs is due to the spring growth of demand for polyethylene (PE), as well as a planned stop on the prevention of the second-largest producer – KOS. This year was no exception, with the aggravating circumstance appears earlier stop on the prevention of the first largest producer of LDPE – Tomskneftekhim – and downtime Angarsk Polymer Plant.

In January – February LDPE market there is a serious oversupply, with demand for finished products was very low. According to some market participants, in some segments of the decline in demand reached up to 30-40% compared to the previous year. Together with the low demand for finished products, most processors also there is a serious shortage of working capital.

Kazanorgsintez for many years carries out preventive maintenance on the production of LDPE in the beginning of April – early May. However, a serious surplus in the first two months of PE deals in the market, the pessimistic mood in the market of finished products in terms of problems with working capital did not allow many processors and trading companies to form additional reserves of LDPE. Expensive credit resources are added each month to the cost of polyethylene by 1.5 thousand. Rub. per ton, while, on the contrary, seemed to oversupply and the strengthening of the ruble against the dollar forced Russian producers to reduce prices of PE.

However, prices have not fallen, and began to grow in the second half of March. In particular, if at the beginning of the month of the transaction for the supply of 158-th JHA concluded in the range of 102 000-106 500 rubles. per ton, including VAT, CPT Moscow, then by the end of this month PE rose to 110 000 rubles. per ton, including VAT, CPT Moscow, and this is only the beginning.

No processors or traders were unable to form these reasons sufficient stocks of LDPE to offset preventive stop production on the basis of Kazanorgsintez (April 10th the company will start a consistent stopping power on prevention, which will last until May 7th).

The situation is aggravated by the fact that in mid-February due to compressor failure in the production of ethylene stopped the release of polyethylene Angarsk RFP (simple power last until the end of May – beginning of June). Angarsk venture on average supplies to the Russian market is not less than 2.5 thousand. Tons of LDPE per month.

Thus, in April, the market lack of polyethylene will increase, which will undoubtedly lead to further price increases. At the same time, if in the past years after the May holidays traditionally began voltage drop in the market, and prices were falling, then this year the situation is much worse.

It is highly probable that the market in mid-June will not be able to generate additional reserves LDPE to “normally survive” long stop production at the facilities Tomskneftekhim (the company plans to stop its power in the second half of June for 30 days to carry out large-scale reconstruction). In July, the preventive maintenance has traditionally go “Gazprom Neftekhim Salavat” and Ufaorgsintez.