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Bearish polymer trend prevails after extended holidays in Turkey

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 22/07/2022 (02:59)
Polymer players reported that the downfall continued in the post-holiday period for several resins as demand has failed to pick up in Turkey. PP, PVC, PE, and PS prices all witnessed new rounds of drops this week as buying appetite remained thin given a slew of factors.

Competition heats up for PP, prices at 20-month lows

PPH and copolymer markets opened the week with renewed drops since lethargic end demand continued to curtail resin consumption. High inflation, global weakness and financial challenges kept purchases at a bare minimum right after the Eid al-Adha holiday.

Saudi Arabian PP raffia and fibre prices were assessed $70/ton lower from the pre-Eid week to respectively stand at $1180-1200/ton and at $1200-1220/ton CIF Turkey, subject to 6.5% customs duty. Saudi PPBC inj. offers were sharply reduced by $120-130/ton, reaching as low as $1300/ton, but there was still no buying interest.

European and Azerbaijani cargos offer competitive edge

Aggressive irregular PP offers put an added strain on sellers this week. This was because they stood about $50/ton below the offers from regular Middle Eastern suppliers.

South European PPH raffia prices were reported at an average of €1200/ton ($1223/ton) CIF Turkey, cash no duty. As for copolymers, offers were heard at €1300/ton ($1324/ton) for PPBC inj. and €1400-1450/ton ($1426-1477/ton) for PPRC inj. with the same terms.

Prompt Azerbaijani offers emerged at competitive levels of $1200-1230/ton FCA, subject to 6.5% customs duty for raffia, fibre and injection. Russian PPH prices below the $1200/ton CIF mark were also talked but not confirmed by the wider market at the time of publication.

PVC sees no respite from hefty declines

Prices continued to recede following the holidays, with offers for duty-free PVC K67 falling to their lowest in nearly two years. Overall, import prices slumped $120-200/ton from the pre-holiday week.

A prolonged weakness in end demand kept buying activities subdued while buyers were not in a rush to buy resin given the diving price levels in Asia.

The Taiwanese major’s August announcement was a key factor in driving prices down.

The producer cut its new offers by $230/ton to India, $190/ton to China, and $200/ton to other regional markets, prompting Turkish buyers to take extra caution amid rising expectations of seeing further price cuts. This also led to expectations of visible drops from the US, South Korean and Russian suppliers among Turkish buyers.

European K67 hits $1200/ton CIF

Toward the end of this week, PVC converters reported receiving offers at $1200/ton from European producers for August, which pointed to triple-digit declines on the month. Other duty-free origins were speculated to be as low as $1150-1180/ton in a few cases.

According to players, weaker performance in end-product markets such as housing and construction remains a major component supporting price erosion in August. The upcoming summer holidays in Europe and the globally weak scene remain among the factors keeping the August outlook bearish in Turkish markets.

Demand concerns weigh on PE outlook for Aug

LDPE has been under intensifying pressure from competitive European offers during the last 3 months. This was not a surprise to players, considering waning demand in Europe’s spot PE markets. Another pressure point has been plentiful Russian cargos as a lack of interest from Europe amid war-related sanctions caused more cargos to find their way to Turkey.

Indian PE re-emerges, eyes to stay on Europe

Middle Eastern producers are projected to reveal additional decreases to Turkey in August based on weak demand from Asian outlets and the nearing holidays in Europe. Meanwhile, Indian LDPE and LLDPE film prices respectively emerged at $1480/ton and $1330/ton CIF Turkey, subject to 6.5% duty, but lacked interest, reflecting muted demand across the region.

Players expect European sellers to remain focused on their exports to nearby Turkey next month given the holidays at home, so long as producers do not reduce their operating rates.

Muted activity drags PS down, inflation continues to bite

Lackluster demand led to additional discounts in PS markets since most buyers remained on the sideline to monitor the upstream markets. Most of them claimed to have sufficient resin stocks as seasonal hopes faltered due to inflationary pressures that curbed their end businesses.

Asian offers witness new lows

This week, Asian PS prices reflected lower styrene prices and Covid-impacted downstream demand across the region. Accordingly, South Korean GPPS and HIPS prices touched $1900/ton and $2000/ton CIF Turkey, no duty, respectively on the low ends. Similarly, Pakistani offers were down to $1950/ton for GPPS and $2050/ton for HIPS, CIF, subject to 3% customs duty. The lower prices failed to grab demand, however.

Growing delta with raffia weighs on HIPS

According to the weekly average data from ChemOrbis, the local HIPS market carries a massive premium of around $1050/ton over the PP raffia market nowadays amid limited supply for the first one. This is to say, more buyers may shift to raffia unless HIPS sees notable corrections in the coming term.
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