October PP, PE expectations call for minor changes in Türkiye
PP in flux amid talks about limited import supply, subdued derivatives
PPH producers showed another attempt to lift their prices last week, encouraged by market talk about an unexpected propane issue in Saudi Arabia last week, not to mention still-limited Russian cargos. Raffia sellers tested $1030/ton CIF, subject to 6.5% customs duty, cash, while fibre was up slightly to $1060/ton on the high end of the market with the same terms.
South Korean PPBC inj. offers for October shipments also posted some gains on the month, driven by multi-month high spot propylene prices alongside a crude oil rally stretching as far back as July.
Nonetheless, buyers’ reactions were mostly lukewarm, disregarding some comments from a few traders about slightly rising price inquiries.
This was because several manufacturers have kept running their factories at lower rates to offset muted demand from downstream markets at home and abroad. Export demand from European end users has not been up to expectations so far following the summer holidays, as multiple PP buyers put it.
Moreover, a lack of access to bank loans kept polymer players on their toes and purchasing power low in the market.
For October, the market will take shape with supportive costs and firm prices in China’s import PP market on the one hand and unpromising demand outlook on the other. According to the weekly average data from ChemOrbis, the PP markets of Türkiye and China were in balance over the past week.
PE has some room for further hike attempts next month
In the meantime, PE fared a tad better than PP throughout this month due partly to limited import LDPE allocations from Middle Eastern producers. Although ebbing demand came to the fore in the second half of the month, sellers confirmed achieving better sales than for PP.
Contributing to the scene was tight ex-USG supply amid some unexpected plant issues in the Americas. Indeed, some traders even claimed that traditional destocking activity might not take place by the year’s end given force majeure news for PE from CP Chemical in the US and Nova Chemical in Canada.
Looking at netback calculations based on Middle Eastern import PE prices in China, Türkiye has some room for new price hikes moving into Q4, albeit in more modest amounts. A lack of healthy netbacks coupled with soaring ethylene costs across the board will pave the way for higher PE offers from regular suppliers. Still, players rule out the possibility of notable price gains for October deals, pointing to a lack of supply issues in the country as well as financial issues that loom over trading activity.
“So long as oil futures remain close to a 10-month high and China’s import markets retain their strength, global sellers will try to obtain new hikes in Türkiye. Nevertheless, large increases would see resistance from Turkish converters unless liquidity tightness eases in the coming term,” a consumer commented.
Bullish costs to act as a buffer against demand strains
Most players expect polyolefin markets to stay firm due to factors related to production costs, as producers’ margins have been weighed by bullish naphtha and olefin prices in global markets. Buyers may prefer to buy their limited needs to hedge against higher PP and PE prices. Still, early projections for November call for a downturn if activity fails to revive in Türkiye and new polymer capacities from China loom over global outlets.
“Türkiye has been partly separated from some other markets, with talks about a potential Brent oil price as high as $100/bbl and optimistic news about recovered activity along with macroeconomic boosters in China having a limited impact on sentiment,” a PP and PE trader opined. Another player thinks that the foggy outlook for Q4 may keep players from securing any cargos beyond their needs while prompt availability may diminish in the coming term.
According to players, sellers will try to maintain their firm stance in October with margin concerns and supportive upstream chain will act as a buffer against demand woes. Still, markets may only see minor changes or even rollovers, depending on the product, if financial issues continue to weigh.
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