Early reactions to Turkey’s dumping case on Saudi Arabian LDPE

Turkey initiated a dumping investigation on LDPE (Low Density Polyethylene) imports from Saudi Arabia over the weekend. With possibilities from now on in question, players have put the latest news on the table and expressed their projections for the coming term.

What happened?

The Ministry of Trade launched a dumping investigation on LDPE imports (with HS code 3901.10.90.00.11) from the Kingdom of Saudi Arabia on October 17.

The application was made by Turkey’s Petkim Petrokimya Holding AS., with an allegation that dumped Saudi Arabian LDPE imports caused material damage in the economic indicators of the domestic production branch amid the country’s rising market share over the years.

For detailed decree on the Official Gazette, Please click

Knee-jerk reaction from Turkish players

Needless to say, the market reaction to the recent announcement has been swift considering the fact that Saudi Arabia has uninterruptedly been the number one import LDPE supplier of Turkey since 2018.

Saudi Aramco, ExxonMobil, Dow, SABIC, Basell and Tasnee are cited among regular LDPE exporters to Turkey.

Global traders commented to ChemOrbis, “Some major companies provide LDPE from their plants both in Europe and Saudi Arabia, occasionally. The recent political tension between Turkey and Saudi Arabia may have played a role in the recent investigation.”

A source from a Middle Eastern producer opined, “We found the probe reasonable considering that Petkim is a main supplier for this product. Players adopted a “wait-see” stance as it remains to be seen when the investigation will be completed. We will continue to monitor the upcoming developments.”

Some players believe that it may not take a long time to hear the outcome of the investigation. “Although it generally takes up to 7-12 months for a probe to be finalized, the decision may come faster,” argued a converter. Another buyer thinks that the additional duty may be applied based on companies but not for all Saudi brands, as a side note.

What do import statistics suggest?

According to ChemOrbis Import Statistics, Turkey imported around 36,013 tons of LDPE from the Kingdom of Saudi Arabia during January-August, 2020. The country was followed by Germany (18,937 tons) and Belgium (17,885 tons).

Looking to the last decade, Saudi Arabia was Turkey’s top supplier in 2012-2013 with more than 60,000 tons of LDPE exports in total. The country overtook Azerbaijan’s place in 2018 to become the top supplier once again with 41,000 tons of exports to Turkey. In the whole 2019, Turkey imported 36,500 tons of LDPE from the kingdom.

Alternative import sources started to be discussed

LDPE consumers started to evaluate alternative supply sources based on a possibility of anti-dumping duties on Saudi origin. Buying interest for Saudi Arabian LDPE cargos may probably wane in the coming days, as participants put it. “Converters will be looking to European, Qatari, Iranian and Israeli origins more in case they are willing to import raw material,” a manufacturer said.

Petkim: We will ensure our customers’ needs

The news spurred concerns among some LDPE buyers over the supply outlook as they commented, “The market may head for artificial price hikes considering the fact that a loss of notable export volumes from Arabia would pull sellers’ offers up.”

A spokesperson from Petkim shed the lights on supply concerns among LDPE consumers.

“We have a notable market share in Turkey’s LDPE market owing to our two plants. We are producing almost all grades of LDPE and LDPE-t and will be ensuring to meet most of the market demand. Moreover, we plan to reduce our export volumes if necessary in order to keep giving priority to our local buyers,” he said.

He added that the company had applied for an investigation in the previous years based on the pricing difference between Saudi Arabia’s domestic market and export offers to Turkey.

LDPE maintains firm outlook over the short-term

LDPE lagged behind the PE firming during the first half of October as overall demand was curtailed by high USD/Turkish lira currency and rising COVID-19 cases across the board.

The possibly reduced volumes are likely to pave a way for a new series of LDPE hikes in the market. This comes on the top of an ongoing upward pressure from the prevailing import prices in China.

A large buyer commented, “We attributed the recent probe to a virtual embargo of Saudi Arabia towards Turkish goods. We hope to be allowed to use our re-export documents since we consume both domestic materials and Saudi cargos. There are concerns that LDPE prices may post larger hikes in the coming term as a consequence.”