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October PE hikes capped by demand concerns; PP tries to hold in Türkiye

by Merve Madakbaşı -
  • 09/10/2023 (02:01)
Import polyolefin prices followed a stable to firm trend over the past week, with sellers’ hike targets being clouded by hesitant demand. Suppliers justified their hike attempts with the previous rally in the upstream chain, which squeezed their margins. Yet, resistance mounted on the buyers’ side amid faltering cost support, not to mention the impact of deep cash issues on resin consumption.

CIF Türkiye – Import Prices – PP – LDPE – HDPE – LLDPE

Import and local markets on divergent paths

Import PP and PE markets witnessed a new round of hike attempts in line with some sellers’ limited quotas and need to improve their margins. Higher olefin contracts and a slight demand pickup in Europe also lent support to suppliers in their quest for higher transactions.

At the same time, the locally-held markets failed to respond, mainly because demand remained tepid amid severe cash flow issues and distributors needed to run their cheaper stocks down. “Some traders offered below the current costs of imports to deplete their arriving cargos due to a lack of confidence in the upcoming trend.”

Arriving Russian LLDPE cargos weigh on market

Mirroring the divergence, local PP, LLDPE C4 film and HDPE film prices were assessed $10-30/ton lower by the week ending October 8 from the prior week. LLDPE recorded the largest drops as multiple players confirmed, “Newly arrived Russian cargos have led to a wave in the LLDPE market as they emerged below the $1300/ton inc. VAT threshold.”

The local raffia range was last assessed at $1270-1330/ton ex-warehouse Türkiye, inc VAT basis. LLDPE C4 film was at $1310-1360/ton while HDPE film stood at $1340-1490/ton.

Most traders preferred to shy away from engaging in fresh cargos considering the current demand situation and financial challenges that pervade polymer markets. “The pressure will remain intact until old cost stocks diminish,” one of them said.

PP sellers issue monthly hikes, but to no avail

PP sellers have lifted their prices for new shipment cargos, blaming moderate allocations from some Saudi Arabian suppliers as well as surging production costs. Nonetheless, these attempts were once again pushed back by converters, who have cheaper stocks on hand and experience fewer orders from derivative sectors as compared to the previous years.

Saudi Arabian PP raffia and fibre offers were assessed at $1010-1030/ton and $1040-1060/ton CIF, subject to 6.5% customs duty, cash by the week ending October 8. This was mainly because cheaper local cargos with old costs curtailed the buying appetite for import PPH cargos. Large-scale buyers were able to obtain raffia at or slightly below the $1000/ton CIF mark in case of firm bids.

Larger PE hikes meet buyers’ resistance

Regular PE producers started to seek monthly hikes as October kicked off, while this was in line with earlier projections driven by supportive costs. Yet, the size of the increases was limited by hesitant demand, a recent slump in crude oil markets and the absence of Chinese players amid a 10-day holiday. Adding to the scene has been the emergence of relatively more competitive prices for prompt cargos amid the ongoing cash flow issues, which dampened demand for import cargos.

Middle Eastern prices were last assessed at $1060-1080/ton for LDPE, $1040-1060/ton for HDPE film and $1030-1050/ton for LLDPE C4 film CIF Türkiye, subject to 6.5% duty, cash, indicating $10-20/ton gains from late September.

Although sell ideas propelled closer to the $1100/ton CIF Türkiye threshold based on the previous climb in global ethylene markets, calm demand prevented larger increases. A converter said, “Some regional suppliers planned to ask for $50-60/ton hikes or more for this month, but we heard that buyers’ reactions have been lukewarm as their cargos with lower costs have been on the way.”

Players to monitor fading cost support, China’s return

On top of the mild demand outlook, the recent slump in global crude oil benchmarks cast a pall on downstream PP and PE markets over the past week. At the time of writing, NYMEX and Brent crude oil futures indicated a steep loss of around 6-7% week over week to trade below $85/bbl.

Faltering expectations for the post-holiday period in China and a potential spillover impact on Southeast Asian markets are likely to exert pressure on sentiment in Türkiye’s polyolefin markets going forward. “The bullish trend in Europe may not find much reflection in the market so long as the outlook in Asian PP and PE markets appears unpromising and the upstream chain adds to its losses,” a player commented.
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