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Premium of PP fibre over raffia widens to $85 in Turkey

by Merve Madakbaşı -
  • 22/02/2019 (08:38)
The firming in the PP market was pioneered by fibre by the middle of January. Although this was followed by firmer levels for raffia shortly after, the fibre market has shown a sturdier performance mainly due to mounting supply woes.

Petkim applied first PP hikes after 8 months

On Tuesday, the domestic producer, Petkim applied its first price hike since June 2018 and lifted its list PP prices by $20/ton for raffia and $40/ton for fibre, injection. The news encouraged local distributors to raise their offers. “PP raffia offers below the $1500/ton threshold disappeared, while prompt fibre neared as high as $1600/ton inc VAT,” converters affirmed.

Delta between fibre and raffia hit $85/ton

According to the weekly average data from ChemOrbis Price Index, both PP raffia and fibre prices have recorded cumulative increases of around $45/ton during the last one-and-a half month. Nonetheless, the delta between the two products has widened to almost $85/ton this week.

After reaching a record-high level of more than $100/ton in March 2018, the delta between the two products mostly hovered in the spread of $25-50/ton for the remainder of last year, data reveal.

Delayed Mid-East cargos boosted fibre demand

Fibre converters did not purchase much volume during January in line with their preference to operate with minimum inventories amid tight liquidity and moderate end demand. “Unexpected delays in shipping from Saudi Arabia and Israel prompted manufacturers to return to the market to procure their urgent needs, which boosted demand and led to tightness,” opined players.

A technical disruption at Advanced Petrochemical’s (APC) plant in Al Jubail on the top of the ongoing absence of another Saudi supplier, NATPET since October last year have exacerbated supply concerns this month. Players don’t expect NATPET to resume operations before September, last reports said; while the exact duration for APC’s shutdown was not disclosed.

Traders refrained from engaging in large quantities

Several traders in Turkey have also been cautious with their stock replacement activities since the last quarter of 2018, taking economic struggles into account. “Less Egyptian fibre quotas were allocated to Turkey in February when compared to usual. Moreover, the domestic producer, Petkim, has limited stocks at the moment due to its satisfactory sales earlier this month,” added a buyer.

When may supply find relief?

It remains to be seen when tightness will ease while no considerable relief is projected for the short term. A new round of increases seems on the corner for March so long as the ongoing constraints at the abovementioned PP facilities remain in place.

“A Saudi major already sold out its allocation in H1 February and next offers will most probably be higher at around $1220-1250/ton CIF. We can hardly find any offers for fibre nowadays. Iranian sources are not active either and freight rates from the country have risen heading to Newroz Holiday,” admitted a manufacturer.

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