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Bearish PP trend takes no respite on lackluster demand in Turkey

by Merve Madakbaşı -
  • 30/04/2021 (08:14)
Decreases in import homo-PP markets of Turkey gained momentum this week, bringing the cumulative drops to 12-13% since the trend reversed in mid-March. Activity remained poor as the country entered a full lockdown as of late Thursday, which added to the Ramadan lull.

In a nutshell, factors that sent offers to below new thresholds were as follows:

•   A lack of bids from buyers weighed on sellers
•   Competitive Asian PPH exacerbated the pressure
•   Bearish May expectations kept buyers sidelined
•   Supply outpaced demand on arriving cargos

Import PPH declines reached $235-275/ton in 6 weeks

Import homo-PP prices started to level off by the middle of March as sellers yielded to a growing resistance from buyers toward sky-high offers. Offers came down gradually throughout April as the combination of comfortable stocks at converters and Ramadan lull kept buying appetite immensely slow.

A large converter said, “We are planning to meet our needs from the prompt market in May. Import prices are set for further falls based on slow demand in America, China, Southeast Asia and the virus-hit India. This makes import cargos more risky.”

According to the weekly average data from ChemOrbis, import PP raffia prices retreated by $275/ton since the downturn started, while the total drop for PP fibre reached $235/ton.

“Still, bids from buyers have been extremely few as much lower levels are believed to be around the corner in May. Falling import prices in China coupled with signals that the uptrend may lose steam in Europe also keep the waiting mood in place,” a trader lamented.

As can be clearly seen on the ChemOrbis Product Snapshot below, import prices for all origins added to their losses during the last days of April. Saudi Arabian prices took the lead in downtrend as May offers were talked as low as $1600/ton for raffia and $1700/ton for fibre on the low ends.

*Right click the image and open in a new tab to view the full-sized snapshot.

Import Prices – PP Raffia – PP Fibre – CIF Turkey

Competitively-priced Asian cargos weighed on the market

Traders were eager to liquidate their stocks amid widespread expectations for additional drops. Some sellers preferred to do “back-to-back” business as they found engaging in fresh cargos risky based on opinions that prices still have room to move down.

Competitive Chinese homo-PP offers continued to suppress Turkey’s PP market during the last few months after cushioning meteoric hikes back in mid-Q1. This was because thin buying interest and low margins at home forced Chinese sellers to divert their cargos to Turkey and Southeast Asia. Offers for Chinese raffia and fibre came down by another $50-70/ton from last week, meanwhile.

Moreover, first offers from Ulsan PP Co.’s new plant have emerged at attractive levels this week. Offers stood at $1620-1630/ton for raffia and $1680-1700/ton for fibre and injection, both CIF Turkey, cash no duty. Despite their competitiveness, these prices had their share of cautious demand for distant cargos.

No signal of demand recovery for the short term

Players do not see a pick-up in activity likely in the short term since Eid al-Fitr holiday is approaching. Demand may revive to some extent by June once players return from holidays, according to sellers.

“We are not optimistic about demand outlook until June as buyers seem sufficiently covered. Plus, the nationwide lockdown between April 29-May 17 will lower consumption for certain applications,” noted a trader. Slower demand from sack and mask manufacturers will probably affect consumption of raffia and non-woven grades during the curfew, players concurred.
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