Mid-Eastern PP, PE sellers aim for higher prices in Turkey

In Turkey, many market players stepped out of the market to attend K Fair that takes place on October 19-26 in Dusseldorf, Germany. This kept overall activity restrained this week. Right before the fair, Middle Eastern PP and PE suppliers expressed firmer sell ideas based on higher crude oil costs and limited availability, while demand status during and after K Fair will play a leading role in the future tone of the markets, concur sellers and buyers.

A limited number of PP and PE offers have been voiced by sellers this week, while buyers postponed their inquiries to K Fair.

A global producer applied increases of $30/ton for homo PP raffia and fibre while lifting their prices by $10-20/ton for LDPE film, all for Saudi Arabian cargos. “We issued higher list prices this week due to our limited allocations. We could conclude some sales for LDPE film for which the trend is firm due to tight supply. However, our homo PP prices didn’t see much interest and just remained as notional,” a producer source said.

Accordingly, the seller’s most recent PP prices stand at $1040/ton for PP raffia and $1060/ton for PP fibre, CIF Turkey, subject to 6.5% customs duty, cash, while their LDPE film offers are at $1210-1220/ton with the same terms.

A manufacturer reported, “An agent of a Saudi Arabian PP producer told us that they aim for $1020/ton CIF Turkey, subject to 6.5% customs duty, cash for homo PP raffia. However, they admitted this level has not been found workable by buyers for now.”

Both sellers and buyers agree that the sentiment and activity volumes during K Fair will be an important indicator for the direction of both PP and PE markets. A Middle Eastern PE supplier reported to ChemOrbis, “We have seen a better atmosphere and crowd than we expected during the first day of the fair.”

Middle Eastern offers in China, where offers were raised on the back of higher crude oil prices, improved demand and rising futures markets, reveal that prices have room to move up on CFR Turkey basis. However, demand for PP is considered depressed in Turkey against a relatively firmer scene for PE as supply is limited for LDPE and HDPE in particular.

Another factor to watch will be the trend in China for the coming weeks as to whether the bullish trend continues to find support from supply-demand dynamics and recently fluctuating energy costs. Sellers are expected to maintain their firm stances in the country over the short term amidst encouraging news regarding China’s economic growth which met expectations. However, some players do not exclude the possibility of slight downward corrections in November. A new PP capacity coming online by late October may put a cap on the bullish trend for that product. PE prices might cool off in case LDPE availability eases, some players also argue.

Looking upstream, spot propylene costs were $20/ton softer on FOB Korea basis week over week, while ethylene costs were also $15/ton lower on CFR Northeast Asia basis in the period amidst up and down fluctuations in energy costs and sufficient availability for those monomers.