Record low lira dampens polymer demand in Turkey
Among the reasons behind the rising US dollar are the inauguration of Donald Trump as the 45th President of the United States on January 20 as well as the possibility of more rapid hikes in interest rates from the US Federal Reserve, which are expected in March. According to analysts, higher expected interest rates weigh down on developing countries, more visibly on Turkey where the US dollar and euro reportedly rose more than 9% since the beginning of 2017 amidst a fragile economic, political and geopolitical environment coupled with inner security concerns.
There are concerns that Turkey’s Central Bank may not be able to issue higher interest rates against the rising parity during the meeting on January 24. Players count the nearing Fitch credit note decision on January 27 as another factor weakening the Turkish Lira as the credit rating agency, which was the only one not to lower Turkey’s note, may cut the country’s rate this time which creates concerns within the markets.
PP and PE prices remained on a bullish trend over the week amidst limited supplies from Middle Eastern sources who keep their quotas to Turkey at moderate levels considering unsatisfactory netbacks compared to other global markets. The domestic producer, Petkim applied increases of $20-30/ton for PP and $20/ton for LDPE list prices earlier in the week which contributed to the trend. However, many players concurred that the falling Turkish lira at an unprecedented pace depressed trade despite the ongoing price hikes.
A Saudi Arabian producer reported selling out their January quotas thanks to their modest allocations. “No one is willing to stock up nowadays as the weak Turkish lira pushed buyers out of the market. PS demand was satisfactory while PP was better than PE, if we would make a comparison,” a producer source stated.
A PP fibre converter opined, “Some needs-based purchases can be seen due to lack of sources, but the situation in general is not so promising due to economic and political uncertainties in Turkey.” A packager predicted that PE prices would hover at around the prevailing levels, while PVC may be adjusted down considering the winter season, while another manufacturer deemed the current PE hikes from the Middle East and Iran as too large to pass on deals under these circumstances.
A polymer distributor commented, “This week, the market is extremely silent for all products due to the parity rally. Prices had started to see acceptance last week but now slack demand is dominant as parity is a concern for manufacturers rather than soaring prices.” A second seller, meanwhile, said his sales for Iranian PS performed well recently despite the general negative factors thanks to their competitive power against deep sea and European cargos.
A PVC and PE trader agreed, saying, “We are trying to stay adamant at our current levels. At the same time, buying appetite is severely depressed since players are in a waiting mood amidst concerns regarding the parity and bids are rare.”
In the meantime, the USD/TL parity cooled off at around 3.78 by late Thursday while €/TL was reported at 4.09.
More free plastics newsPlastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...
- Asian spot propylene regains premium over ethylene for first time since 2013
- Import LDPE, LLDPE prices almost back at par with ethylene in China
- Turkish players voice early PP, PE expectations for November
- Thin buying cushions impact of PVC shutdowns across Europe
- China’s PP market makes a strong start to post-holiday period
- Asian ethylene-naphtha spread narrows to 3-year low
- Local PVC markets plunge in India, Southeast Asia
- PE sustains soft path in October across Africa, Mid-East
- Will propylene hike be reflected on European PP?
- US PE sellers continue to target SE Asia as trade war with China escalates