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PP market fails to digest full hikes as activity almost grinds to a halt in Turkey

by Merve Madakbaşı -
  • 04/10/2019 (09:17)
The sentiment in Turkey’s polyolefin markets shifted upwards by mid-September. Oil prices were rocked by major supply issues at Saudi Aramco, which propelled higher offers in downstream PP markets for October given lower operating rates , whereas they have proven to be unworkable recently.

Buying appetite revives in H2 Sept, but loses steam

Turkish converters returned to the market to make inquiries out of their fears for price hikes amid rising supply woes from Saudi Arabia and firmer prices in China. However, this was apparently a short-lived revival. “Most buyers were involved in panic purchases in the second half of September. Activity winded down visibly after that,” a trader lamented this week.

Petkim’s hike decision contributes to firming

The domestic producer, Petkim issued $40/ton increases on its PP list prices on September 17. Although the move was generally met with buyers’ resistance, it undoubtedly contributed to the firmer stance of distributors.

Falling oil casts shadow on outlook

Not only the fact that manufacturers turned to be covered for a while but also the easing energy complex limited the degree of firming in Turkey. The full resumption of oil supplies from Saudi Aramco caused expectations to falter moving into October, with some sellers trimming their hike targets this week.

Oil prices were weighed down by forecasts from the International Monetary Fund (IMF) and the World Trade Organization (WTO) showing that global economic growth is gradually slowing down. Another factor to pull crude futures down was the weekly inventory report from the Energy Information Administration (EIA) that suggested a more than expected inventory built in late September.

Players are focused on China’s return from National Day holiday

Now that stagnant demand has taken the center stage in Turkey, PP players shifted their attention to China, where players are expected to return from a week-long holiday next week.

“We cannot say PP prices are back to September levels as partial hikes were achieved on the low ends of the ranges. However, the blurry post-holiday scene in China under the shadow of the expected increase in domestic supplies and lower oil prices could disrupt the firming in Turkey even further,” a manufacturer marked.

Some traders concurred, “The resistance built on the side of converters forced us to step back from our initial offers. We plan to monitor the developments in China, where the firming trend cooled off right before the holidays.” Prior to the holidays, China’s import PP market displayed a mostly steady trend with a Saudi major revealing rollovers for October shipments.
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