Are PP decreases slowing down in Türkiye?

PP prices in Türkiye have been eroding since mid-August as suppliers succumbed to weakening demand, lower oil prices, and falling freight rates, alongside easing supply levels. The market extended its losses into October for all origins, with competitive duty-free South Korean offers continuing to pressure Saudi Arabian cargoes. Nonetheless, some sellers noted that price cuts seem to be losing steam, though buyers are maintaining their cautious stance.

Saudi PP raffia breaks below new threshold, fibre stays flat

Saudi Arabian PP raffia prices at or above the $1100/ton CIF Türkiye mark, subject to a 6.5% customs duty, faded last week as suppliers issued additional reductions to generate buying interest. This week, most offers dropped to around $1050/ton with the same terms, with speculations about levels as low as $1030/ton following.

Meanwhile, for fiber, offers for the same origin have hovered around $1100-1120/ton for another week. A textile manufacturer noted, “If we were to purchase, we could likely obtain a slightly lower price. The market has not broken below the $1100/ton CIF level due to limited price discussions, in our view.”

Market slides by up to 9% since Q3 kicks off

According to weekly average data from ChemOrbis, import prices for Saudi Arabian PP raffia, fiber, and injection have slipped by 7-9% ($80-110/ton) over the last three months.

Nonetheless, the combination of a firmer post-holiday market in China, driven by economic measures, rising spot propylene prices in Asia, and soaring oil benchmarks due to Iran-Israel tensions, has led traders to question whether price cuts in Türkiye may halt in the coming term.

Looking at netbacks, the premium of Saudi Arabian PP raffia prices on CIF Türkiye basis over China dropped to $180/ton from $210/ton prior to the Golden Week holiday.

PP drops have lost some momentum after prices hit certain thresholds, according to suppliers. “Although Far East Asian offers continued to provide a competitive edge on the low end of the market this week, and downstream demand remains weak, we believe some buyers may be willing to secure cargoes for the new year, considering the volatile cost side,” a trader commented. Some consumers also said, “We are not sure if PP raffia can fall further to $1000/ton CIF despite our earlier projections, especially if upstream costs maintain their bullish trend.”

Pressure from competitive S. Korean PPH offers persists

Duty-free South Korean PP raffia and fiber offers extended their losses this week, with prices falling below $1100/ton and $1150/ton, respectively, for this origin. Sellers have been actively offering these cargoes since the start of October, coinciding with the National Day holiday in China. A converter remarked, “If freight rates from the region continue to decline, we may also see Chinese PPH prices in the market toward the year’s end, given the country’s massive production capacity. With current FOB prices, Chinese PPH can’t compete in Türkiye for the time being.”

Derivative demand, financial challenges keep cautiousness in place

Most sellers hope that the recent round of price drops will entice PP buyers to return to the market to replenish their inventories, as they have been relying on their existing stocks for some time. However, some players take a more cautious approach for the coming term, citing weak European PP markets and skepticism about the sustainability of China’s stronger post-holiday demand.

“Turkish manufacturers have been operating their factories at reduced rates due to poor margins, coupled with tight liquidity, which has kept purchases at a bare minimum. Until derivative industries show a solid recovery, which does not seem likely before sometime next year, resin purchases may remain modest ahead of year-end book closures,” a player commented.