Market Dynamics
Demand for LLDPE dropped in Russia by 2% in H1 2014
Time: 2014-07-17 Source from: www.mrcplast.com
MOSCOW (MRC) -- Demand for linear low density polyethylene (LLDPE) from Russian converters, particularly, from films producers, decreased by 2% over the first six months of 2014, according to MRC ScanPlast.
Demand for LLDPE dropped to 110,200 tonnes in the Russian market in the first half of 2014 from 112,400 tonnes over the same period of 2013. Weaker demand for LLDPE did not affect all sectors of consumption, but the key sector - films production - still demonstrated a 3% decline in consumption.
The beginning of 2014 (the first two months) was quite hard for Russian LLDPE consumers. Local producers of stretch films experienced particularly hard times. Devaluation of the rouble in February led to a price rise of material for more than 10%, while prices of finished products remained unchanged. This fact slowed demand for LLDPE from stretch films producer. A similar situation was with film producers that add linear polyethylene to improve the quality of finished products. Soaring LLDPE prices also led to weaker demand in this segment.
The structure of LLDPE consumption by sectors over the stated period looks the following way.
Demand for LLDPE in the films production sector dropped by 3% in the first half of 2014 to 98,800 tonnes. Demand for LLDPE from the key consumers - producers of irrigated stretch films - decreased by 9%, whereas producers of blown stretch films, on the contrary, showed a 30%-increase.
Demand for LLDPE from producers of large blow molding products surged by 58% over the said period and totalled 6,200 tonnes. Demand from cable products producers also increased: by 63% to 1,100 tonnes.
At the same time, demand in the injection molding and compounding sectors fell by 19% and 48%, respectively, to 900 and 1,200 tonnes.
As reported earlier, the local LLDPE market is completely dependent on imports, the share of domestic polyethylene (PE) does not exceed 10% in the market. Nizhnekamskneftekhim, Russia"s only LLDPE producer, was forced to focus on the production of high density polyethylene (HDPE) because of the outage at Stavrolen. The share of Russian PE is expected to grow in the LLDPE market (because of increased production at Nizhnekamskneftekhim) not earlier than in 2015. However, the market will still be dependent on imports, even given the scheduled increase in the output.