Supply limitations bolster Feb PP and PE outlook in Turkey

Polyolefin prices moved further north as 2023 kicked off, with suppliers receiving good demand from their customers for their limited volumes, particularly in the first half of January. Players have already started to discuss the February outlook amid indications from global outlets. They mainly expect markets to retain their strength due to the waning supply in Turkey.



Polyolefin markets up further moving into H2 Jan

Both import and local PP and PE markets have witnessed gradual price hikes on the heels of availability issues, while demand has also been supportive so far. The absence of some regular producers amid numerous turnarounds pervaded both markets and fueled buying interest.

Reduced allocations from mainstream Saudi Arabian sources coupled with delivery issues from Russia paved the way for a new slew of price gains for PP, while PE turned up buoyed by restricted Middle Eastern and US volumes by the new year.

Adding to the scene has been bullish pricing from the domestic producer, Petkim. The company lifted its LDPE prices after melting their stocks with sizable discounts late last year. The seller also issued additional hikes for PPH and HDPE grades, encouraged by the dwindling availability on the side of distributors amid delayed imports.

This week, Saudi Arabian PP raffia and fibre were assessed higher at $1070-1100/ton and $1100-1130/ton CIF Turkey, subject to 6.5% customs duty, cash, respectively. A global trader opined, “January hikes have worked while it may take some time for consumers to digest prices at/above $1100/ton CIF.”

Import Middle Eastern PE prices were assessed with additional increases of $10-20/ton as compared to last week. Accordingly, offers were assessed at $1130-1150/ton for LDPE and $1110-1130/ton for LLDPE C4 and HDPE film CIF Turkey, subject to 6.5% duty. It’s worth noting that some nearing LLDPE cargos for early February arrival were traded even higher at $1140/ton.

Outlook under discussion amid local and global dynamics

Players have ruled out any possibilities of a shift in trend so long as availability concerns linger in February. Crude oil futures have been on a steady rising streak in recent days, which is likely to keep the cost support valid.

Many traders concurrently opined that both PP and PE prices will remain on an upswing next month, with no major easing in supply being seen on the near horizon. Moreover, Asian markets have been on a strong note on the heels of tight import availability, not to mention some reports about active demand from India.

Players: Markets prone to see moderate hikes

Nonetheless, the sustainability of demand will have the final say about the size of any possible gains. Players say, “We do not project dramatic price gains as some previously purchased cargos may arrive after a slew of delays.”

A trader expects to see higher PP and PE prices but adds that he stopped replenishment for the coming term, taking the uncertain impact of Ramadan and presidential elections on demand into account.

“Overall, seasonal factors may underpin PP and PE toward spring, while prices may move within a narrow range in the medium term with economic volatility on the one hand and supply management on the side of resin producers on the other hand,” some players commented.

In the meantime, participants pointed to the growing pressure on LDPE, citing its lack of a healthy premium over LLDPE prices in Turkey as well as import offers in Asia. According to the weekly average from ChemOrbis Price Index, Middle Eastern LDPE film carried a premium of only $20/ton over LLDPE in Turkey this week. The gap with China and Southeast Asia has been down to $50-80/ton, as a side note.

Players keep a close eye on China

China’s polyolefin markets remained supported by tight import supply, while falling domestic stocks and firmer Dalian futures also contributed to the improved sentiment this week. Some Turkish players remain skeptical about the post-CNY scene in the country given the rising infections in the aftermath of Covid curbs and a global economic slowdown. Yet, most traders have held optimism and expect China’s PP and PE markets to make a strong start to the post-Lunar New Year holiday period next month.