Sentiment reverses for PP, PE in Turkey

Turkey’s polyolefins markets were on an increasing trend since mid-August in line with reduced quotas from regular Middle Eastern suppliers who were not happy with low netbacks compared to other global markets. However, the sentiment has shifted recently as relentless increases stopped last week for both products due to the rising dollar/TL parity and the nearing year end weighing down on purchasing activity and due to weakened December expectations.

In the PP market, sellers confirmed slower demand from converters who are mostly sidelined after meeting their needs in the first half of November. Many manufacturers are now struggling with the weak Turkish lira (TL) as they buy raw material on dollar basis and sell their end products on TL. “Rising costs on both sides pushed manufacturers out of the market,” said a trader.

In addition to limited allocations from the Middle East, scheduled shutdowns at Indian and Egyptian suppliers reinforced supply limitations particularly for PP raffia in recent months. Nonetheless, the market saw competitively priced American and Russian origins recently in line with suppliers’ destocking activities heading to the year-end which brought supply into balance with demand.

Import US PP prices were reported at $1000/ton CFR Turkey, subject to 6.5% customs duty, cash amidst widespread speculations about levels below this threshold. A trader offering this origin said, “Turkish buyers are not that interested in those cargos given their long delivery terms. Yet, our supplier is reluctant to concede to $980/ton for now as they are still able to achieve better margins in China.” American PPBC injection prices stood at $1070-1080/ton with the same terms, while BOPP and homo PP injection were available at $1000/ton.

Russian PP raffia was traded at $1010-1020/ton CIF Turkey, subject to 6.5% customs duty, cash earlier in November, before prices moved down to $980/ton last Friday. “We believe we could obtain $970/ton if we were to buy,” said a sack maker. Another converter voiced his buy idea at $950/ton. Other origins such as Saudi Arabian, Iranian and Turkmenian stabilized between $1000-1030/ton with the same terms just a week ago before offers became scarce ahead of new announcements.

In the PE market, supply issues stemming from shutdowns at Saudi Polymers’ Al-Jubail complex and Lotte Chemical’s plant at Uzbekistan in October-November coupled with reduced quotas from several Middle Eastern suppliers kept the market strong especially for LDPE and HDPE grades until recently. American and Indian HDPE cargos surfaced at attractive prices this week though, which weighed down on other sellers. “This is not surprising when considering the slowing demand in the domestic markets of India and the US towards the end of the year,” a player opined.

US HDPE film and injection prices were quoted at $1100-1110/ton and $1060/ton, respectively, CFR Turkey, subject to 6.5% customs duty, cash, forming the low ends of overall import price ranges this week.

Indian PE prices also form an attractive option as they stand close to the low ends of the import market with duty advantage. Indian HDPE film was reported at $1140/ton CIF Turkey, subject to 3% customs duty, cash this week after showing up at $1180/ton last week. Indian PE 100 pipe (Natural) surfaced at $1200-1220/ton with the same terms, according to a pipe manufacturer. “PE prices displayed a downturn recently in general. We expect to hear more Indian and Russian cargos in the days to come,” the buyer noted.

A source from a global PP, PE producer reported, “We are planning to resume our Saudi Arabian PP and HDPE offers in December while we are not optimistic about the future outlook. Demand for homo PP raffia and HDPE Blow moulding seems particularly weak nowadays.”

A second producer from the Middle East followed a stable to slightly softer pricing policy on their list prices this week. “We heard that activity in India and Africa lost significant steam. We are planning to follow a more flexible policy on our fresh LDPE and homo PP offers considering the year-end lull,” a producer source noted.

Nevertheless, players do not foresee dramatic price falls for next month considering the fact that China’s market continues to provide better netbacks than Turkey for sellers, which would keep availability balanced with stagnant buying appetite. A large PP, PE trader active in Turkey commented, “We expect the market to soften next month traditionally before rebounding by the second half of January. However, price cuts will not be large since Middle Eastern sources will remain unwilling to direct much material to Turkey citing unsatisfactory netbacks here.”