MOSCOW (MRC) - The first half of December was quite calm in the Russian market of high density polyethylene (HDPE). HDPE prices slightly increased in the second half of the month, and this trend is likely to continue next year, according to ICIS-MRC Price Report.

 

Buying activity in the Russian HDPE market has traditionally recovered in the early December, as many converters replenished their inventories. Some companies increased their HDPE purchases on the eve of the long New Year holidays.

 

Despite the increase in demand, the Russian HDPE producers rolled over their November prices for December. But in the second half of December PE prices began growing under the pressure of the next wave of rouble devaluation. 

 

Earlier this week, the foreign exchange rate significantly fluctuated. Central Bank of the Russia tried to stabilise the dollar, including raising the key rate by almost 7%. Some commercial banks have temporarily suspended lending.

 

All of these factors put pressure on the Russian PE prices. Given the new rate of the dollar exports of HDPE became more profitable, and the producers expressed the need for price increases, citing the rising production costs (some producers use dollar in the price forming). 

 

Negotiations on January contract prices began this week. Some market participants reported an increase in contract HDPE prices of Rb4,000/tonne. 

 

The spot market also reacted to what was happening, but more moderate. Prices for film HDPE this week grew to Rb83,000 - 84,500/tonne FCA, including VAT, while a week ago the deals were done on average down Rb500/tonne.

 

Converters, in their turn, said in the current situation it is problematic to accept any price increase. Banks refused to credit, while the rate on loans already reached 27% per annum.