The current year was rather difficult for the Russian PEND market. Over the course of the year, an excess of supply remained on the market. Autumn downtimes of the two largest manufacturers did not affect the market balance, and the last two months of the year were remembered by the dynamic decline in prices.
2019 for the PEND market was atypical and rather complicated over the past few years. In the first half of the year, excess imports exerted serious pressure on the Russian market, as a result of which PEND constantly became cheaper after the record price level that was reached in October 2018. In the summer months, the seasonal factor led to increased demand and a slight increase in prices. September downtime for repairs of the two largest manufacturers – Stavrolen and Kazanorgsintez did not lead to a shortage, and had only a short-term impact on prices. And since October, the oversupply led to lower prices, while the dynamics of falling prices intensified in November – December. 2020 will be even more difficult due to the launch of a new production in Tobolsk.
In the first half of the year, the availability of PEND in the Russian market exceeded demand by 10-12%, which was mainly due to the growth in imports. In January – June 2019, imports grew by 40% compared to the same period a year earlier. The main increase in external supplies came from manufacturers from Central Asia. It is worth noting that the volume of imports could be even greater if the new plant in Turkmenistan – the Kiyanlynsky Polymer Plant (annual capacity of 386 thousand tons) worked stably.
In January, PEND prices on the Russian market were on average 110,000 rubles / ton, including VAT, CPT Moscow, for blown and film polyethylene. And under the pressure of excess supply, by July polyethylene fell to 100,000 rubles / ton, including VAT, CPT Moscow, and below.
In the summer months, prices stabilized on the polyethylene market, and the market itself was already more or less balanced in terms of supply and demand. Moreover, in July Gazprom Neftekhim Salavat stopped its facilities for lengthy repairs, and some market participants began to prepare for September, when Stavrolen and Kazanorgsintez, with a total capacity exceeding 800 thousand tons per year, stopped their facilities for lengthy repairs.
The September downtime of the two largest Russian manufacturers led to short-term price increases, but the market did not experience a shortage. Some consumers for the period of preventive repairs formed additional stocks of HDPE, but to a greater extent the lack of Russian polyethylene was offset by record volumes of imports since 2012. In July – November, external deliveries exceeded 30 thousand tons, with the exception of October.
Since mid-October, with the completion of preventive repairs of domestic manufacturers, the market began to respond with lower prices under the pressure of an increase in PEND supply. In November – December, the dynamics of lower prices for polyethylene increased. And prices fell below the level of 2018.
It is also worth noting that in November a new plant, ZapSibNeftekhim, began operating at PEND in test mode, with a total capacity of 1.5 million tons per year. The debut of the new manufacturer was the release of injection PEND. In the first quarter of 2020, the appearance of natural pipe polyethylene is expected.
In fact, the new manufacturer in its rated capacity exceeds the total capabilities of the existing four manufacturers. And in 2020 there will be a complete reformatting of the Russian PEND market taking into account new realities and doubling of capacities with an increase in demand by 3-5% per year