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“Nizhnekamskneftekhim” will raise the price of synthetic rubber

“Nizhnekamskneftekhim “(NKNH, part of the group” TAIF”) in connection with the growth in the Russian market of the cost of raw materials for the production of synthetic rubbers intends to increase product prices, after discussing this issue with its customers, media reported.

The demand for NKNH rubber products is fully covered by the concluded contracts, according to the company’s materials. However, the level of world quotations for natural rubber, determining the price of synthetic rubber, this year is much lower than last year. Meanwhile, the cost of hydrocarbons for the production of synthetic rubbers is growing in Russia, which leads to a decrease in operating profit in this segment.

The company intends to work to increase the prices with their customers, says the company.
However, “Nizhnekamskneftekhim” considers insignificant the risk of losing major customers, the turnover with which accounts for not less than 10% of revenue.

Following the rise in oil prices, the European price of straight — run gasoline (the main raw material for NKNH) increased by 7% in the quarter, and by 46% compared to the second quarter of 2017. According to the IHS, in 2018, the European price of naphtha on average may grow by 37%.
The supplier of Nizhnekamskneftekhim is TAIF-NK refinery, which accounts for 55.89% of raw materials. The price of straight-run gasoline for the company in the II quarter of 2018 increased by 58.99% compared to the same period last year.

Earlier inform-Devon reported that the revenue of “Nizhnekamskneftekhim” in the 1st half of the RAS increased by 8.1% and amounted to 87.5 billion rubles. At the same time, the cost increased by 19% to 65.8 billion rubles, and net profit decreased by 19.4% to 11.627 billion rubles.

“Nizhnekamskneftekhim” is one of the largest producers of synthetic rubbers in the world. NKNK sells synthetic rubbers under long-term contracts to tire companies such as Pirelli, Continental, Bridgestone, Pirelli, Michelin and Goodyear. In 2017, the company shipped 704 thousand tons of synthetic rubbers, which is 5% more than in 2016. Of these, 83% were sold to large foreign consumers under long-term agreements.