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Firming PE trend stumbles, medium-term expectations stifled in Turkey

by Merve Madakbaşı -
  • 11/10/2019 (11:53)
October started on a firm footing for PE as sellers approached Turkey with price hikes. This was deemed a reflection of Aramco-driven cutbacks in H2 September. Nonetheless, buyers have recently pushed back since the previous revival in activity faded with latest deals representing rollovers or smaller hikes than initially sought.

Oct hikes were trimmed due to resistance of buyers

Middle Eastern PE producers initially sought increases of up to $40/ton for the new month citing their limited quotas as a justification of their higher targets. Nonetheless, waning demand amid an economic and political turmoil seems to have outstripped the reduced supplies, particularly for LDPE and LLDPE grades from the region. Many suppliers have trimmed their initial hike targets in an attempt to entice their sales.

Deals saw around $20/ton discounts over initial import offers

Several buyers have secured their needs, paying rollovers to small gains when compared to September. A packager marked, “We achieved some discounts from a Saudi Arabian major following our negotiations despite the supplier’s earlier requests of $20-30/ton higher HDPE and LLDPE prices on a monthly basis.”

Firmer attempts for US PE were similarly curtailed by thin interest from Turkish manufacturers for long-distance volumes heading to the end of the year. Traders conceded to $10-20/ton discounts on HDPE film and blow moulding deals if buyers replaced firm counter bids this week.

“PE prices in Turkey have been almost back to September levels this week as many sellers yielded to muted buying appetite,” a seller admitted.

Firm trend stumbled also on China’s weaker return, lower upstream

A bunch of factors including a weaker post-holiday scene in China as well as lower oil and ethylene prices have pushed Turkish converters to the sidelines in the recent couple of days.

“PE prices in China faced a downward pressure from increased domestic supplies, as was previously foreseen, and consecutive losses in Dalian futures market during the first week following National Day holiday. The uncertainty regarding the US-China trade war also keeps global markets on the edge,” a trader highlighted.

Spot ethylene prices in Asia and the US softened during the last two weeks, data from ChemOrbis Price Wizard revealed. “This coupled with lower energy prices added to the weaker scene in global markets as the last quarter of the year kicked off. We are not planning to engage in any long-distance cargos over the coming term,” opined a Turkish converter.

Possible year-end lull, low season cast shadow on medium-term outlook

Not much activity is likely to take place next week as several market players are readying to attend to K-Fair that will take place on October 16-23 in Düsseldorf, Germany.

Looking ahead, buyers expect to see lower prices in November-December. The year-end may witness traditional destocking activities on the sellers’ side, which supports this view. “November usually points to an off-season for certain PE applications. The fluctuation in USD/TRY currency amid the recent political issues causes us to preserve our wait-see stance,” said a buyer.

Limited supplies to lend support to LDPE

The reduced availability from the Middle East as well as Petkim helped LDPE grades display a stronger trend compared to other PE products since October started, meanwhile. “LDPE may retain its strength on the heels of a lack of Middle Eastern and US offers in the short term. We also heard that the domestic producer has been having issues providing smooth supply for film grade recently,” opined players.
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