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Downtrend continues in Turkish PP, PE markets amid Ramadan lull

by Merve Madakbaşı -
  • 16/04/2021 (03:58)
Turkey’s polyolefin markets have been facing a slowdown since last month, which caused resin prices to retreat from early March peaks. The lethargy of demand became even more evident this week as the holy month of Ramadan commenced on April 13.

Increased supplies coincided with poor demand

Many buyers opted to remain out of the market in April after paying sky-high prices back in February and early March when the markets were influenced by a deep tightness in supply.

A growing resistance toward meteoric hikes exerted pressure on sellers, which caused offers to level off starting from H2 March. The previously secured PP and PE cargos provided relief to the supply outlook. Gradually waning demand also led to increased availability in the market as April kicked off.

The combination of Ramadan lull, comfortable prompt supplies, and slowing demand for certain end applications pushed both PP and PE prices down further this week. Sellers complained, “The markets almost ground to a halt in the last couple of weeks. Buyers are shying away from engaging in fresh cargos despite the recent price cuts. Weak expectations for May also keep trading tied to needs.”

PPH prices broke below new thresholds

Import homo-PP offers added to their drops this week with PP raffia already breaking below the $1800/ton CIF Turkey threshold for Saudi Arabian and Russian origins. Still, players emphasized that the recent round of drops barely boosted activity and deals remained extremely scarce.

Participants also agreed that the discrepancy between buy and sell ideas deepened. Traders noted, “We lack bids from our customers. There is a wide gap between the prevailing offers and buy ideas even after the latest drops. Even if a seller offers $100-200/ton decreases, buyers would resist.”

The locally-held PP raffia market has declined by more than $450/ton (17%) in total from early March. It had soared almost $1000/ton during a wave of abrupt increases in February, meanwhile.

Breaking below $2200/ton on the low end, the overall price range was assessed $20-50/ton lower on the week at $2150-2240/ton ex-warehouse Turkey, inc VAT. The level excluded more competitively-priced Turkmenian raffia at $2100-2120/ton. Similarly, PP injection prices moved below the $2250/ton threshold in some cases.

Local Prices – Turkey – PP raffia – LDPE – LLDPE – HDPE

Attractive local PE prices curtailed demand for imports

As can be seen from the graph obtained from ChemOrbis Price Wizard above, the weekly average of local LDPE, LLDPE, and HDPE markets respectively fell by 9.6% ($260/ton), 12% ($285/ton), and 11% ($220/ton) from multi-year highs in early March.

Traders affirmed, “Buyers are electing to meet their limited requirements from the prompt market where prices were steadily coming down. No one is eager to take risk of distant cargos as prices may fall further in late H1.”

Import PE prices from the Middle East emerged with notable hikes at the start of April before regional producers stepped back from their initial targets, yielding to thin buying appetite.

Manufacturers: Demand from end users relative waned

The main reason behind slowing activity has been buyers’ inability to pass their rising resin and shipping costs through their end customers. Manufacturers reported that the end business has been hampered further by the start of Ramadan recently. A packager said, “We have not realized a pick up in demand before the Ramadan, while the partial lockdown may also keep trading limited in the coming term.”

Textile and carpet manufacturers in the southern region of Turkey said, “Our exports are curtailed by higher product prices while orders from Europe have cooled off. We are also monitoring the US’ proposed tariffs of up to 25% on certain products imported from Turkey, including carpets and textile goods.”
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