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PP prices in freefall in Türkiye on thin demand

by Merve Madakbaşı -
  • 09/06/2023 (10:21)
A bearish PP trend has prevailed since June kicked off as a slew of factors, including subdued derivative demand, lower upstream costs, and global weakness have put a heavy strain on suppliers. Saudi Arabian producers have been aggressive amid their ample supply, not to mention unsatisfactory demand from China and Europe.

CIF Türkiye – Import PP Prices– Raffia – Injection – Fibre

Saudi Arabian PPH dives by 8-10% just in two weeks

Saudi Arabian suppliers have been more aggressive than other sellers, including Russian producers, recently. This attitude was mainly attributed to piling stocks on the side of producers amid a lack of plant issues and poor demand for import cargos in Asian outlets, where Chinese producers have been starting up massive capacities since a couple of years now.

“The official recession in Europe appears to be a new pressure point on markets, let alone slower-than-expected recovery in China and SEA economies. Indeed, Saudi producers have been somehow trying harder to boost their sales compared to Russians,” argued multiple players in Türkiye.

Raffia sinks below $950/ton CIF Türkiye

PP has stayed entrenched in a bear market during the last few months. According to the weekly average data, Saudi Arabian import raffia and fibre prices hit their lowest levels since August-September 2020 following the latest wave of rapid drops.

Accordingly, Saudi Arabian raffia prices were assessed $70/ton lower on the week at $930-950/ton CIF Türkiye, subject to 6.5% duty, cash, with deals on the low end. Saudi fibre and inj. were assessed $20-40/ton lower at $960-1000/ton with the same terms.

The new lows in China, where Middle Eastern PPH prices hit around $810/ton CIF on the low end this week, kept expectations weak in Türkiye for the near term.

“Some converters plan to shut their factories during the extended Eid al-Fitr holiday in late June. The lingering cash issues may be another factor to keep demand both for resin and finished products at a bare minimum. In the meantime, players will monitor the impact of the depreciation of the Turkish Lira against its peers on business in the days to come,” a trader commented.

Local PPH, copolymer see fresh lows

The steep erosion in the import market has dragged the distribution channel down, too. The local raffia range was assessed $40-50/ton lower at $1300-1370/ton on ex-warehouse Türkiye, inc VAT basis from last week. Local PPBC inj. was assessed $20-40/ton lower at $1420-1470/ton with the same terms.

The downswing was also mirrored by Petkim’s lower spot prices as competitive Middle Eastern offers forced the local producer to revise its spot offers for another week. It is important to remember that the company will continue to produce resin during holidays, which may keep the pressure valid.

Is bottom in sight following hefty declines?

Fresh lows caused some Turkish players to question whether the PP market might be nearing to the bottom. According to the weekly average data from ChemOrbis, Saudi Arabian PP raffia prices on a CIF Türkiye basis are currently carrying a year-to-date low premium over China’s import market. Whilst the figure has been down from $160/ton last week to $105/ton, Türkiye may not have much room to fall further.

Nonetheless, players concur that the approaching holidays, economic woes and the uncertainties about the trajectory of global PP markets may keep the trend weak. “Decreases may lose some steam if China gives a sign of stabilization. Still, tight liquidity, long supply and low consumption across the board may continue to affect the outlook unless resin demand really picks up,” a player opined.
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