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March PE expectations in Turkey weighed by new capacities, cooling demand

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 21/02/2020 (04:48)
Turkey’s import PE markets moved north starting from late December. Prices were pushed up by reduced supply from the Middle East as well as the end of destocking activity on the side of US producers. However, the sentiment has relatively softened moving into H2 February due to a series of factors.

Rising USD/TRY parity undermined end markets

Turkish buyers preferred to adopt a waiting stance this week in a bid to gauge volatile energy markets and the size of PE drops in China which have been valid since two weeks ago.

Furthermore, the depreciation of the Turkish lira against the American dollar hampered the end markets of Turkey this week.

“Multi-month high USD/TRY currency tempted converters to trim their purchases. Weak March expectations also added to their cautiousness,” opined a trader. The depreciation of the local currency continued after the Central Bank lowered interest rate on Wednesday as USD/TRY saw as high as 6.10 on Thursday.

HDPE faces pressure from newly-launched capacities

An increased number of buyers reported receiving offers for materials from brand new PE plants in Azerbaijan (SOCAR), Russia (SIBUR) and South Korea (Hanwha Total Petrochemical). Competitive prices mainly emerged for HDPE film and pipe black (100) and stood up to $40-60/ton below the low ends of the prevailing import market.

“We expect HDPE prices to face an intensifying pressure from offers from new capacities in the days to come. Irregular origins have already started to pervade the Turkish market amid a lack of demand from China,” noted a packaging converter.

A source from a Russian producer confirmed to ChemOrbis, “We have started to offer HDPE film this month. Other PE grades are yet to be available from our newly-launched plant.”

“LDPE and LLDPE prices may record smaller discounts next month, while HDPE grades are likely to face a more visible pressure from increased supply for various origins,” players marked.

Long distance PE cargos see thin interest

As a side note, players find it risky to engage in long distance cargos including for Indian, Far East Asian and American origins nowadays. The blurry medium-term outlook amid volatile energy markets and depressed global activity also cause them to shy away from purchases beyond their basic needs.

“A lack of clarity over capacity utilization in China and the negative impact of corona virus on global economies creates a gloomy outlook through the second quarter. Turkey’s PE market will be weighed down by global factors in the coming term. Thus, we plan to meet only our urgent needs from the prompt market,” said some buyers.

Soft trend in China casts a cloud on outlook

The weak trend in China’s import market mitigated the impact of the ongoing turnarounds in the Middle East and across Asia on the sentiment. In China, import PE prices lost around $10-20/ton in some cases week over week. Subdued demand amid the ongoing coronavirus (COVID-19) threat and high domestic polyolefin stocks dragged prices lower.

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