Russian polymer processors and producers gathered at the IV International Forum «Polymer Business of Russia» held a round table «Polymer Raw Materials: Price Trends, Indicators and Trade Policy», where they discussed the principles of pricing of selling prices for polymers.
The most acute discussion between raw material producers and processors arose in the light of the information widely covered in the press about the prices for basic polymers, which are often exported significantly lower than domestic prices.
Polymer producers told about the principles of their pricing based on the analysis of raw material cost of logistics costs and market conditions, including the world market, for those who have an export component in their sales. They drew attention to the growth and fluctuation of raw material prices, fluctuations in working capital costs due to rising lending rates, which occur throughout the year, often spontaneously.
The participants of the meeting shared how they negotiate with consumers, trying to understand their principles of price formation, and their trade policy, their desire to meet the problems of consumers, which certainly in the situation of 2022-2023 was not always successful due to many market factors.
An acute discussion between raw material producers and processors arose in the light of the information widely covered in the press about the prices of basic polymers, which are often exported at prices noticeably lower than domestic prices.
Polymer producers argued their pricing policy in foreign markets by the price situation in these markets and gave examples when information in the press and at conferences is based on verbal communication during meetings of Russian consumers abroad at exhibitions with local processors.
These meetings often do not take into account the fact that the prices discussed in most cases are FOB, i.e. without taking into account delivery to the consumer, and the so-called domestic prices are noticeably higher than what is discussed at the meetings.
The situation with production capacities, which are noticeably higher than the capacity of the Russian market, was covered in detail, and export supplies are to a certain extent a forced measure. If the production volume is reduced to domestic consumption, the conditionally fixed costs will increase sharply and, consequently, the costs and, as a result, the price of products.
Processors present at the forum told how polymer price increases often within a quarter cause a storm of indignation of consumers of processed products, tension in relations, due to the fact that planning and financial control in almost all companies are based on quarterly, not monthly quotations.
«Alas, there are cases of rising prices for polymers without any argumentation on the part of producers. And the processing industry, working today in difficult conditions, when spare parts for equipment and many additives from the eastern market have to be mastered anew, spending a lot of effort on homologation processes, wants to see the producers of basic polymers as its partners. At the same time, the world market conditions and the dollar exchange rate cannot play a significant role in pricing under the new conditions. «Tug-of-war of profits» at meetings of raw material supply services and sales department of producers and processors is completely unacceptable», — commented Mikhail Katsevman, President of SPP, Director for Science and Development of SPP «POLYPLASTIK».
The discussion also focused on SIBUR’s import, export and investment forcings initiative, which enables refiners to move towards innovative development by supporting companies and certain raw material price incentives.
The relatively large number of such projects implemented in 2023 and tons shipped under them is a positive factor, but not enough to seriously improve the situation in the industry. Given the new industry structure of realization at SIBUR, there is a request from refiners to reconsider the principles of such afterburners and significantly expand their scope of application.
The positive point in this rather heated discussion was the attempts to understand each other’s positions, and the positive fact was the common opinion that the Russian plastics industry needs to develop jointly, and therefore trust each other more. To go into all the details carefully, to think about the efficiency not only of their productions, but also of their consumers. The result and refrain of the discussion was trust as a necessary factor of mutual growth.