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Sentiment cools off due to unpromising PP, PE demand in Türkiye

by Merve Madakbaşı -
  • 17/03/2023 (02:42)
Players in Türkiye’s polyolefin markets started to voice their early April expectations. Prices have reached a plateau both for PP and PE, several participants believe, while lethargic demand casts a pall on the outlook ahead of the nearing Ramadan.

Clouds hang over polyolefins on demand woes

PP and PE prices opened March on a firm footing as the ongoing supply cutbacks from Middle Eastern producers continued to lend support to sellers, let alone the lingering delivery delays from Russian suppliers since early Q1. However, both markets were torn between limited supply and unsatisfactory demand as the month proceeded.

PP buyers opted to secure some cargos shortly after the devastating quakes that struck southeastern cities. This was because most of them tackled supply disruptions as their materials were either burned or stuck at the fire-hit Limak Iskenderun Port. Congestion at Mersin Port was also added to the scene.

After ensuring their needs and power was restored in the region, manufacturers offset their lost production and fulfilled their backlogged orders from February. “This caused activity to wind down once again amid subdued derivative markets,” said a trader.

As for PE, HDPE fared better than all other products, with b/m (large container) shining out thanks to buoyant demand and tight availability. Nonetheless, demand was not up to expectations for LLDPE and LDPE, which resulted in setbacks from mainstream suppliers.

“The lethargy has been felt profoundly for LDPE. Consumers secured plentiful cargos from the import market back in early Q1. This lets them keep their purchases to a bare minimum. Also, lackluster downstream demand and comfortable prompt supply caused a mounting pressure on this product,” players said.

According to the weekly average data from ChemOrbis, the premium of Middle Eastern LDPE over HDPE film has been down from $60/ton to $20/ton in a month, reflecting the lack of momentum for the first one during the last firming.

Rally falters in import markets

More players are convinced that the bullish trend for polyolefins has come to a halt and prices signal a stabilization for the near term. Traders and converters currently said PP and PE prices do not have further room to rise based on widening gap with China’s import market, where thin demand overweigh limited import supply these days.

CIF Turkey – Import Prices – LDPE – LLDPE – HDPE – PP

“Some traders seemed willing to get rid of material before it arrives warehouse while the market sags under cash constraints,” a packaging converter said.

This week, Saudi Arabian PPH prices were assessed flat between $1140-1200/ton CIF Türkiye, subject to 6.5% customs duty. Middle Eastern PE prices were notionally stable at $1220-1240/ton for LDPE, $1160-1180/ton for LLDPE C4 film and $1200-1220/ton for HDPE film with the same terms.

Supply to see relief on planned restarts

Apart from unpromising demand outlook between the approaching Ramadan and May elections, the possible return of Middle Eastern plants from turnarounds cause jitters among players. Several producers have conducted shutdowns at their plants in Saudi Arabia, Kuwait, Qatar and Oman since January or February while they are readying to come back in April.

For more detailed production news on a plant and producer basis, please visit ChemOrbis Production News Pro.

Russian availability poses a conundrum for polyolefins

A lack of fresh offers from Russia has permeated the markets since the beginning of 2023 as delivery delays amid logistic issues emboldened sellers to issue gradual hikes for other origins. Nevertheless, some players pointed to the arrival of some January cargos, adding that they expect to hear new prices next month after a long time.

Indeed, a few Russian offers for certain grades, including PP inj., BOPP and HDPE film, injection emerged this week after weeks of absence.

Players do not rule of possibility of corrections

In a nutshell, polyolefin markets will be in the doldrums while prices will face pressure from easing supply if demand stays mediocre and offline plants resume on time. Clouds on PP and PE markets may not scatter until after the elections on May 14. Players will remain on their toes due to economic uncertainties while tight liquidity will likely hammer trading in early Q2.

Turkish players think that new April prices may emerge with rollovers. At the same time, the possibility of price corrections is not ruled out based on weak polyolefin indications from major markets of China, India and Southeast Asia, let alone the impact of an approaching Easter break in Europe. “PP and PE may go downhill if supply lengthens, and crude oil futures add to their recent losses,” said a consumer.

A source from a Saudi Arabian producer said, “We may see $30/ton corrections next month. Although supply is not comfortable, demand does not signal a recovery for now.”
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