PP takes a bigger hit from tight imports; hikes outpace PE in Türkiye

Tight import availability has had a knock-on effect on polyolefin prices throughout January, as Türkiye depends on import supply sources to a large extent. Buoyant demand amid fears of delivery delays and plant turnarounds for Q1 contributed to the rally while panic buying occurred in the first weeks of the month and led to diminished prompt stocks. Nonetheless, PP took a bigger hit from dwindling import allocations and posted more rapid hikes than PE as it depends on import sources more.

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Cumulative increases near $200 for PPH, versus about $100 gain for PE

According to the weekly average data from ChemOrbis, import PP raffia and fibre prices have soared by $160/ton (16%) and $190/ton (18%) compared to 4 weeks ago, respectively. This was a knee-jerk reaction to longer lead times of up to 50-60 days from its main supplier, namely Saudi Arabia. Adding to the scene were reduced spot allocations from Russia.

Looking at PE, hammered Middle Eastern import volumes coupled with scarce Russian and US offers spurred vivid buying interest this month. Yet, hikes were not as drastic as PP. Middle Eastern prices were up by $100/ton (10%) for LDPE film and LLDPE C4 film while HDPE film rose $70/ton (6%) in total on a weekly average in the same period. Iranian HDPE film cargos helped the market counterbalance a lack of other regular sources, which kept the gain relatively modest for this product. “Deepening supply snarls wreaked havoc on both PP and PE. Yet, we had Petkim to provide half of the market’s LDPE needs, at least,” a player commented.

Pricewise, both PP and PE markets are expected to remain strong next month based on the ongoing supply crunch. Nonetheless, players are aware of the possibility that dramatic increases may see resistance at some point. Converters may not pass their drastically surging costs on to their end customers and longer lead times may deter buyers from purchasing beyond their needs. Indeed, both markets signaled that panic buying relatively cooled down this week.

ChemOrbis Stats Wizard data explains it all

In 2023, Saudi Arabia, Russia and South Korea were Türkiye’s top homo-PP suppliers, with respective shares of 39%, 17% and 11%, based on the available data for the January-November period. Imports from Saudi Arabia and South Korea have been hit by the Red Sea unrest the most, with container prices climbing and equipment issues coming to the fore due to the re-routing of several cargos since the crisis broke out in late December. Meanwhile, the total PPH imports stood at 1.8 million tons.

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Looking at PE sources for the January-November period, the largest suppliers were Saudi Arabia, the USA and Iran last year, with respective shares of 22%, 17% and 10% in the total import volume of 2.2 million tons. The recent turmoil affected PE, albeit to a lesser extent compared to PP.

Considering the domestic producer, Petkim’s nameplate capacities at 144,000 tons for PP and about 450,000 tons of PE per annum, Türkiye’s total consumption would stand at around 2 million tons and 2.6 million tons for these products, respectively. This is to say, imports account for about 90% of Türkiye’s PPH consumption, while PE imports account for 84% of the total procurement.

PP relies more on imports from Red-Sea routes than PE

According to ChemOrbis Stats Wizard data, it would not be wrong to say that the market depends on foreign PP suppliers more than it does on PE. Apart from limited domestic capacity for polyolefins, one of the main culprits behind the visible rally was the Red Sea turmoil. The combination of Middle Eastern and South Korean PPH volumes accounted for 50% of the overall imports in January-November 2023, versus a total share of 22% for PE.