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May expectations call for further softening in Türkiye’s PP, PE markets

by Merve Madakbaşı -
  • 25/04/2024 (01:51)
Polyolefin markets opened the post-Eid al-Fitr period on a weak footing as Turkish consumers kept their purchases from hand to mouth given the blurry demand outlook in downstream industries. Economic headwinds kept purchasing power low into the new month, for which additional discounts are foreseen, albeit in more modest amounts.

Dutiable PP raffia breaks below $1100 CIF after long holiday

Import PP markets are about to close April on a stable to soft note as demand woes have taken center stage despite the lingering transit issues from regular suppliers, limited spot cargos from Russia and relatively firm prices in China. Right after the 9-day holiday, Saudi Arabian PP raffia offers broke slightly below the $1100/ton CIF threshold, albeit for May shipments. As for fibre, prices touched as low as $1160/ton with the same terms.

A source from a Middle Eastern producer commented, “Minor drops may be seen in May as freights are down relatively. We expected to see revived demand after the holiday, but inquiries are scarce. Exports are challenging for converters. Thus, we are not that optimistic for summer.”

A large trader said, “We do not foresee dramatic falls since costs mostly remain high and long lead times continue to counterbalance demand woes. PP may see minor losses ahead of the June holidays, so long as Brent oil futures remain close to $90/bbl.”

LDPE relatively resilient owing to moderate supply

In early April, it took some time for import LDPE film prices to become clear, unlike the case with LLDPE and HDPE film, for which sellers issued quick drops to wrap up their monthly sales prior to the religious holiday.

As demand cautiously picked up following the holiday in response to limited availability for certain LDPE grades, the local producer, Petkim maintained its price levels. Moreover, CIF offers posted smaller drops than previously expected throughout April.

Another reason behind relatively resilient prices for LDPE was Türkiye’s lack of healthy premiums over the import markets of Southeast Asia and China. “We expected LDPE deals to hit $1100/ton CIF this month, but it has not happened,” multiple players noted.

Some players still believe that Petkim may adjust its prices next month depending on the state of demand ahead of the Eid al-Fitr holiday that will be celebrated in mid-June.

Buyers: LLDPE, HDPE on verge of $1050/ton CIF or below

Meanwhile, consumers sounded more confident about the upcoming drops for LLDPE and HDPE film, citing ample supply, weak demand and the pressure from netbacks to Asian markets.

A manufacturer opined, “We have not received any prices from the Middle East. LLDPE may break below the $1050/ton threshold CIF as prices in Türkiye are still high. HDPE remains under strain of abundant supply and competitive American offers.”

Post-holiday demand up slightly for local cargos

Although import PP and PE cargos failed to grab much interest following festivities, mainly due to their long delivery terms, some buyers were back to replenish their needs from the prompt market. That’s why distributors and Petkim were not in a hurry to lower their prices, as some players put it.

Players face dilemma between costs, subdued global demand

Sentiment for mid-Q2 remains weak in Türkiye’s polyolefin markets, while economic challenges and seasonal factors draw a foggy demand outlook in downstream segments for the medium term. Players expect May transactions to post new drops, but the size of losses may be more moderate so long as Brent oil futures remain close to the prevailing levels.

Global indications do not offer much optimism for now, with ebbing demand in Europe and adequate stocks in Asia, India, and the US looming large over markets. “The market may revive to some extent before the June holidays owing to Turkish consumers’ need for replenishment. We will monitor the geopolitical situation in the Middle East and East Europe, as well as the upstream trajectory. This is bearing in mind that consumption may not achieve a solid recovery any time soon at home,” a player said.
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