Turkey polymer markets entering holiday amid weak atmosphere, what lies ahead?
Demand remained stalled ahead of holiday
Sellers of almost all products have been struggling with muted demand from their customers since April as buyers resisted elevated prices following historic hikes in February. Moreover, supply loosened for polyolefins owing to the arrival of delayed cargos, while liquidity issues and competitive local offers put extra pressure on import sellers.
In April, activity also lost steam for PVC and PS once the holy month of Ramadan kicked off. Most buyers kept their purchasing volumes hand-to-mouth out of their expectations for downward corrections from multi-year highs. A full lockdown was imposed in late April due to rising COVID-19 cases which curtailed demand even further in May.
PE saw sharp declines, particularly for LDPE and HDPE
Import PE prices witnessed sharp decreases over the past week as sellers’ initial decreases failed to boost interest. “It has been clearly a buyer’s market,” commented a source from a Middle Eastern producer.
HDPE grades were under greater pressure due to plentiful availability for various origins including Iranian, Uzbek, Omani, Turkmenian and Russians. After some Middle Eastern sellers initially sought HDPE film prices between $1480-1520/ton CIF Turkey, subject to 6.5% customs duty, much lower Saudi Arabian prices emerged at $1380-1420/ton.
The total LDPE declines from Middle Eastern producers reached $200/ton on a monthly basis. Middle Eastern LDPE offers at/above the $1800/ton threshold faded quickly, while Saudi cargos were priced at $1750/ton. “Aggressive drops in the domestic market created a stiff resistance even toward the low end of the market,” agreed players.
According to ChemOrbis data, Middle Eastern LDPE and HDPE prices to Turkey plunged $150/ton and $190/ton, respectively when compared to a month ago. LLDPE C4 film prices slumped $100/ton in the same period. Although LLDPE drops were more modest than other grades, Middle Eastern prices touched the $1500/ton CIF threshold late on Friday.
Homo-PP hit fresh lows amid ample supply, poor demand
The bearish PP run gathered speed right before the holiday due to constantly thin demand for more than a month as well as aggressive Asian offers. Saudi Arabian PPH offers plummeted by 15-17% from early April, with PP raffia hitting $1500/ton on the low end on Friday.
The cumulative decreases have reached $347/ton (17%) for raffia and $416/ton (19.5%) for fibre since late March, data from ChemOrbis suggest. From May 2020 to March 2021, PP prices had spiked $1130/ton (139%) for raffia and $1274/ton (147%) for fibre in total.
Supply constraints kept PVC drops in check
Similar to PP and PE, activities remained cautious for PVC as buyers were unwilling to purchase beyond their short-term needs. Not only the Ramadan lull and approaching holiday but also the fact that most buyers had stocks with higher costs kept buying interest muted.
On the other hand, the never-ending plant issues in Europe counterbalanced the impact of weak Asian markets and stagnant demand on the sentiment in Turkey. According to ChemOrbis data, import K67 lost 5% in a month unlike much steeper losses for polyolefins.
Lethargy mitigated impact of higher feeds on PS, ABS
As for styrenics, the market remained on a weak footing prior to holidays with a nationwide lockdown keeping consumption restricted for several applications. Players were surprised by higher styrene contracts in Europe for May, yet the news did not perk up buying interest for PS and ABS. “The latest announcements for European PS and ABS cargos failed to grab demand amid higher €/USD parity and competitive Iranian cargos. Although styrene prices moved up in Asia as well, the sentiment was unfazed in Turkey,” opined a trader.
Predictions over post-holiday demand diverge
Many downstream buyers suspended their production starting from Friday. “The markets may have further room to fall based on prices in China and virus-hit demand in India. Moreover, we have plentiful stocks of finished goods on hand and will need time to deplete them even after lockdown,” a polyolefin manufacturer said.
Several PVC and PS manufacturers were also set for turnarounds for a week or so. Thereby, these markets are not likely to see a recovery over the short term. Yet, some sellers think activity may recover towards June in case buyers return to the market and ample availability relatively wanes for certain resins such as PP. “We hope to see better demand next month amid seasonality and the end of lockdown,” a PET bottle converter said.
“European markets sustained their firm note for most products supported by supply woes in May. However, discouraging demand for imports in China, Southeast Asia and India continue to cast a pall on Turkey’s polymer markets. Still, the key factors to watch will be supply-demand dynamics, the trajectory of pandemic and new capacities across the board in the medium term,” argued a player.
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