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PP and PE head for hike attempts amid unhealthy netbacks in Turkey

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 03/01/2020 (04:05)
Turkish polyolefin players have started to slowly return to their desks following the new-year holiday on Wednesday. Not many fresh offers and bids have been reported so far as the holiday lull persists, while short-term expectations call for some hike attempts.

Prices closed 2019 on firm footing

PP and PE sellers applied upward corrections on their prices towards the end of December after the markets sank to around a decade low in Turkey. Aggressive offers disappeared in sync with the end of stock clearing on the side of suppliers, which buoyed buying interest. Petkim’s decision to apply $30/ton hikes for the new month also contributed to the sentiment.

Turkey still lacks premium over China for most products

Prices shifted direction heading to the year-end, with Middle Eastern, Russian and US suppliers withdrawing their offers from the market. Still, Turkey continues to trade below China for HDPE and LLDPE, according to the weekly average data from ChemOrbis Price Index. Homo-PP raffia and LDPE film prices moved above import offers in China last week whereas they are carrying only a $20/ton premium over this market.

Saudi and Russian PP offers up further already

Import PP raffia and fibre prices added to their gains this week supported by the absence of most sellers. A limited number of prices for Saudi Arabian and Russian cargos were reported around $10-20/ton higher week over week. A seller commented, “Buyers will need to adjust to higher prices since many suppliers have already depleted their stocks and feel no sales pressure.”

Saudi major expected to lift PE offers to Turkey

In the PE market, a Saudi Arabian major’s new offers are still awaited. Expectations hint at hike requests from the producer despite its divergent pricing to other major markets for January.

A Turkish player claimed, “The producer is planning to seek up to $40/ton increases for January.” Meanwhile, the major raised its PP, PE offers by $40-60/ton to Egypt, while rolling over its offers to Africa. In China, buyers received rollovers to $20-50/ton drops from the producer.

Global factors may curb hikes in Turkey

The majority of the participants concur that PP and PE sellers will attempt increases next week based on multi-month high energy costs, higher freight rates and low netbacks in Turkey. On the other side of the coin, some factors may keep any possible increases in check.

Concerns over growing supplies amid the upcoming PP and PE capacities in China generate cautiousness on a global scale along with the persisting macroeconomic concerns and large capacities in the US. The long New Year Holiday in China is rapidly approaching which may hinder activity in Asia and may cause irregular origins to head for Turkey.

Moreover, January ethylene and propylene contracts in Europe defied the bullish oil trend and settled with rollovers, which also caused projections for larger hikes in downstream markets falter recently.

“We don’t think any increases beyond $20-30/ton could pass on January deals. Once the previously secured cargos start to arrive in Turkey, PP and PE prices may even level off after January,” opined a manufacturer.
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