Regulator urges petrochemical cos to give up netback in price, prioritize domestic market

MOSCOW. March 29 (Interfax) - Russia's Federal Antimonopoly Service (FAS) has sent the country's largest petrochemical companies recommendations for pricing their products, the regulator reported.

Specifically, the agency urged companies to stop using foreign price indicators when setting prices for their products and to not peg them to exchange rates for foreign currencies. As an alternative to netback, it proposed using Russian exchange and over-the-counter indicators.

"The advantage of using them is transparent pricing that enables companies to build long-term contractual relations based on the established price for the good, which makes it possible to guarantee predictability of prices and ensure the saturation of the domestic market. This, in turn, will protect Russian consumers from a significant increase in costs," the regulator said.

The FAS also proposed that companies change their trade policies to give priority to shipments to the domestic market, prices and the procedure for setting them.

The recommendations apply to the whole chain of products, from the sale of original feedstock to finished products. The proposed measures apply to products such as polyethylene terephthalate, ammonia, apatite concentrate, sulphur, toluene, paraffin, methyl tert-butyl ether, rubber, o-xylene, benzene, propylene, styrene, ethyl acetate and butyl acetate.

The regulator said that compliance with its recommendations will prevent unjustified growth of prices in the construction industry, housing and utilities sector and agriculture.