Delta between PP fibre and raffia down to a 4-month low in Türkiye

Import PP prices retained their strength as July kicked off, with transit times from the Middle East and Far East Asia remaining long, spot volumes from Russia staying limited, and the freight rally not seeing a respite from successive hikes. In the meantime, the premium of the fibre market over raffia has largely evaporated due to varying demand dynamics over the last few weeks.

Fibre currently trades just $30/ton above raffia

According to the weekly average data from ChemOrbis, the gap between Saudi Arabian PP fibre and raffia has hit $30/ton recently, the lowest premium since March 2023. This is compared to a $60/ton gap between the two grades for most of Q2.



Raffia and inj. shine out as demand appears a tad better

Diminishing prompt availability has taken its toll on both PPH and PP copolymer markets to varying extents. While ocean container prices from Far East Asia remained on an uptrend as of early H2 2024, some industry experts are projecting the current shipping crisis to remain intact into early 2025. Adding to the scene were congested Asian ports, let alone delivery times of up to 3 months from certain Middle Eastern ports.

These factors have not only spurred demand for nearby PP cargos, particularly from raffia consumers amid seasonal support from derivative segments, but also propelled Saudi Arabian and South Korean prices higher for all PP grades over the last couple of months.

In the meantime, PP fibre was traded with rollovers in some cases even back in June. Ebbing demand from manufacturers forced some sellers to trim their initial hike goals, succumbing to the Eid al-Adha lethargy last month while fresh offers also moved sideways this week. Still, the lingering logistic mishaps continued kept offers firm at their prevailing levels.

Overall, sellers faced challenges in implementing further price hikes, keeping CIF prices within certain ranges. “Demand for raffia has outstripped fibre while dwindling supply also drove more visible gains for injection grade,” buyers and sellers confirmed.

Saudi Arabian PP raffia was assessed $10/ton higher at $1150-1170/ton CIF Türkiye, subject to 6.5% customs duty, cash basis on the week. Notional PP fibre offers remained at $1180-1200/ton with the same terms as weak demand weighed in. Meanwhile, Saudi PP injection moved above the $1200/ton CIF mark on the high end, fueled by tighter availability for certain MFI grades and fewer supply sources, which buoyed buying enthusiasm for this product.

Weak demand offset limitations for fibre

While supply for PP fibre has also been limited, the situation is not as severe as it is for raffia, as many players put it. “Shipping issues stemming from container shortages and swiftly higher freight rates curtailed import activity in general and stocks at traders were also down. This, coupled with seasonal demand for sacks and big bags, underpinned the market despite still modest run rates at most converters following the holiday. Yet, demand for textiles and carpets waned amid the end of peak season,” a player commented.

Initial reactions to duty revision on certain Azerbaijani goods

As a side note, Türkiye cancelled out duties on polypropylene strips or similar woven bags and sacks of Azerbaijani origin effective as of July 1. Some players voiced their concerns about the decision, saying it may dampen domestic end-product sales on the side of Turkish manufacturers.

PP sellers have preserved their firm stance on the back of troublesome logistic industry as the pressure from elevated shipping costs remained intact. On the flip side, long transit times limited further price hikes, especially as the approaching summer holidays in Europe are expected to reduce export business for converters. This is to say, prices in Türkiye may be rangebound in the near term.

Looking at global clues, PP sellers sought rollovers to some gains on reduced import volumes and pre-holiday lethargy in Europe. China and SEA markets remained under pressure of thin demand despite higher oil prices, while India saw rising import PP offers driven by freight pressure.