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April drops send import PP to 4-year low in Turkey, PE lowest in 12 years

by Merve Madakbaşı -
  • 03/04/2020 (11:19)
Turkey’s import polyolefin markets have been gradually retreating since H2 February before which they hit 6-month highs. Virus-hit logistics across the globe kept the markets’ response to tumbling oil prices limited in the beginning. Nonetheless, the bearish trend gained momentum with the latest April drops that came in larger amounts.

Mounting COVID-19 cases in Turkey triggered tighter measures inside and hampered demand from several industries including textiles, automobile, furniture and construction further on the top of the rising lockdowns all around the world.

Activity has been vivid for certain grades that are used in healthcare products or food packaging, including BOPP, PP non-woven and HDPE blow moulding, in the meantime.

Still, prices for even these grades were unable to escape from a new series of drops. Sharp losses in monomer costs and a blurry economic outlook kept purchases tied to basic needs. “Buying interest has been a bit better for prompt materials when compared to distant cargos. Bids were rare and much below the prevailing offers for imports,” marked a trader.

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PPH offers down 8-10% in a week

Saudi Arabian PP raffia prices broke below $900/ton CFR at the start of the week before posting rapid declines to touch $850/ton on the low end. Similarly, Russian offers hit as low as $820/ton. Bids from large scaled converters as low as at $750/ton exerted extra pressure on suppliers, based on PPH offers as low as $660/ton CFR China.

In China, PP prices witnessed three-digit losses week over week. The country became sellers’ target recently based on muted demand in other regions including Southeast Asia and South Asia amid lockdowns.

PP fibre market ground to a halt amid buyers’ absence

As for PP fibre, the market was unable to take a shape as dampened exports caused many manufacturers to suspend production and skip purchases. A carpet maker lamented, “Our customers cancelled their orders, while a few of them suspended them until the first half of May. We are not interested in raw materials since textiles have been hit by COVID-19 pandemic.” Sellers struggled to set their fresh offers as demand almost did not exist. A few Saudi Arabian prices at $950-960/ton faded as they failed to work.

According to the weekly average data from ChemOrbis Price Index, the overall PP raffia and fibre markets retreated by 8-10% just in a week. The latest levels have come close to 2016 lows following the latest declines, data also revealed.

Middle East PE producers apply notable drops

Regional suppliers announced $70-100/ton decreases from March in most cases under the pressure of aggressive US LLDPE and HDPE offers below $750/ton CFR and thin buying appetite. Some buyers found the recent prices unworkable considering a free-fall in China where Middle Eastern offers have recently broken below $750/ton for LDPE and $650/ton for HDPE and LLDPE film.

According to ChemOrbis data, the prevailing import PE prices in Turkey have neared the levels that were seen in 2008 crisis following the latest weekly drops between 3-5%. As a side note, the world did not house that much global PE capacity back in 2008.

Eyes on energy complex under shadow of virus-led cautiousness

On Thursday, crude oil prices surged following US President Trump’s move to deal with a collapse in energy prices that upended global markets amid virus-hit demand. Through a tweet, Trump revealed his expectation that Russia and Saudi Arabia will reduce oil production while an official confirmation on a possible Russia-Saudi deal was yet to come at the time of publication.

Brent crude futures on ICE Europe touched $30/bbl during intra-day session on Thursday following the announcement, while WTI crude futures on NYMEX saw above $25/bbl.

Oil prices have been searching for a floor recently amid fears over a global recession and virus-hit demand on a global scale. The relatively improved economic data from China and reports that the country may be planning to replenish its official oil stocks created a cautious positivism versus the persisting concerns over the pandemic impact.
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