PP sentiment cools off as August starts on a quiet note in Türkiye

Prices in Türkiye have remained steady for around four weeks, as visibly waning demand prevented additional hikes from global PP sellers. The market snapped a losing streak in early April, maintaining a mostly firm trajectory until this week when sentiment slightly weakened due to financial obstacles affecting commodity markets and weaker offers in Asia’s import outlets.

Market signals slight discounts on Aug deals

Demand for PP has remained sluggish as of early August, with buyers showing limited interest in making substantial purchases. The imminent start of holidays in Europe, combined with lackluster downstream demand at home, has kept Turkish converters cautious. Many of them noted, ’We prefer to keep our production rates reduced since logistical hurdles and the holiday season have curtailed our exports, not to mention the impact of unfavorable exchange rates and low margins. Additionally, selling our goods has become more challenging recently due to customers’ preference for deferred payment terms.

Despite the overall stability in price ranges from the previous week, there is potential for discounts on the higher end of the market due to poor resin demand. ’Some Saudi Arabian suppliers have already slightly reduced their prices within the ranges, considering the lack of bids from customers,’ buyers noted. According to ChemOrbis data, import prices for Saudi Arabian PP have been hovering around their highest levels since February/March of this year.

Sellers confirm weak demand, plan to gauge supply front

Global traders also said, “We approached the market mostly with rollovers whereas we will evaluate firm bids from our customers. Deals may see modest discounts of $10-20/ton on a monthly basis. This is also considering Türkiye’s healthy premium based on netbacks to Asia.” A sack maker reported that most prices centered at or near the low end of the overall import market this week.

Lower PPH prices in Asia, coupled with easing freight rates, weighed on market sentiment, with Middle Eastern offers breaking slightly below the $900/ton CIF China threshold this week. Moreover, firmer propylene contracts in Europe have not propped up the atmosphere as demand remained the main driver in Türkiye.

Transit times for imports continue to be lengthy, still contributing to constrained availability. This, however, has not been enough to significantly buoy prices, as the demand outlook remains weak. While some sellers hold out hope for a pickup in demand toward the end of August —anticipating buyers to replenish their stocks— there is no widespread expectation of a near-term surge in purchasing activity.

A seller commented, “We feel that traders have not been willing to build any stocks given the weak demand scene. This coupled with still elevated freight rates will likely keep price changes minimal. Supply may tighten again in the medium term.”

Locally-held PP market maintains soft trend

In the local market, there have been reports of competitive pricing for prompt materials, with some offers quoted below $1500/ton ex-warehouse, cash including VAT. However, these offers have not yet been widely confirmed by primary sources, at the time of writing.

“We heard a couple of prices in south regions which were even below the cost of the lowest import raffia price. This may be due to liquidity issues and some sellers may try to deplete their old cost materials,” a player commented.

The local PP raffia market has been softening since early July in response to ebbing activity for prompt cargos, with prices posting gradual discounts from a weekly average peak of $1580/ton inc. VAT.

Eyes to stay on costs, global PP markets

While there is a glimmer of hope among some sellers for an uptick in demand by September, the broader outlook remains cautious for the time being, with crude oil markets suggesting a highly volatile trend. Market participants will be closely watching for any signs of increased buying activity or changes in Asian PP trend, between China’s nearing season and weak economic data for July, that could alter the current equilibrium. This is also bearing in mind that Europe is set to make a strong start to the post-holiday period.

The Turkish market’s future trajectory will depend on a delicate balance of global and local factors, including supply chain dynamics, global price movements, and shifts in buyer sentiment.