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Turkey PP, PE markets propelled higher by shipping bottlenecks in Sept

by Merve Madakbaşı -
  • 10/09/2021 (03:10)
Import polyolefin markets in Turkey have recorded new increases as September kicked off. The main trigger behind the hikes has been logistic issues which have led to additional increases in freight rates and long delays in deliveries, particularly from the Middle East.

Shipping delays from the Middle East take center stage

Both PP and PE markets have been in the throes of shipping delays from Saudi Arabia, the largest polyolefin supplier of Turkey, for the last couple of months. Global logistic chaos led to sky-high freight costs in the wake of a severe container shortage and earlier-than-usual Christmas orders to China from all around the world.

Players have been reporting rising freight rates from the Middle East to Turkey, not to mention inflated shipping fees from Asia, which kept Turkey from regular suppliers of India, South Korea, and China in late Q3. A lack of sufficient material from Russia, one of the top PP exporters into the country, as well as delays from Iran and an Egyptian shutdown, have all contributed to the situation.

Multi-month lead times were reported in several cases, which also kept Turkish players on their toes when it came to distant cargos. This also spurred vivid buying interest for prompt materials both for PP and PE.

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

Monthly PE hikes surpassed PP increases in September

PE producers announced large hikes of up to $100/ton for September when compared to August. PP offers posted more incremental gains as compared to PE considering the fact that the market bounced earlier than PE, for which the market reached a plateau in late July.

Looking at the weekly average data from ChemOrbis, however, Saudi Arabian PPH raffia and fibre prices on a CIF Turkey basis have soared by $305-335/ton (24-25%) since the market bottomed out in mid-June.

As for PE, Middle Eastern offers with the same terms have been up by $145/ton (10%) for LDPE, $160/ton (12.5%) for LLDPE C4 film, and $130/ton (11%) for HDPE film in total from late July.

Although Ida-driven shutdowns in the US did not find a reflection on volumes to Turkey, which have already been absent during most of the year, sentiment has been underpinned further by the weather event since late August.

Earlier in the month, players even voiced their concerns about further-reduced supply to Turkey in case global sellers focus on their sales to America more, particularly for PE.

Turkey has drifted apart from China trends

The disparity of Turkey with China’s import polyolefin markets has been a catchy point for months, in the meantime.

Players often say, "We have quit keeping trends in China under close watch some time ago since Turkey markets act independently. Although the gap with China is growing, challenging logistics and overrated shipping costs have kept the two markets unbalanced since the pandemic burst out last year."

Middle Eastern PE prices on a CIF China basis have been moving mostly sideways for most of Q3 2021, except for LDPE, which was bolstered by low overseas supplies. Similarly, PPH prices showed marginal changes amid capacity additions and modest import availability.

ChemOrbis data suggested that Turkey’s import PPH raffia market currently carries a premium of $425/ton over China, which is the highest since April. As for PE, the delta between the two markets stands at $200/ton for LDPE, $295/ton for LLDPE, and $250/ton for HDPE film.

Local markets followed suit amid rising demand for prompt supply

Mounting woes over import deliveries sparked increased demand for prompt or nearing materials, as players put it.

The combination of Petkim’s HDPE hikes on Monday and allocation cuts for various origins, including European, Iranian, Asian, and American, propelled the distribution channel higher. In terms of supply, LLDPE C4 film with slip and LDPE General Purpose continue to be the tightest products, while HDPE b/m has also been considered limited. Players also pointed to limited PP stocks at the local producer.

Logistic mishaps shape early Oct expectations

Some participants have begun to express concerns that the shipping crisis may become more pronounced next month, effectively ruling out any possibility of price relief in a multi-month high market. Demand from converters will still be gauged regardless of supply constraints, as a side note.
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