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Turkey’s PE market extends drops on competitive US cargos, lukewarm demand

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 23/08/2019 (07:44)
PE prices in Turkey sustained their downtrend, which has been in place for more than 3 months now, during the first working week after Eid al-Adha holidays.

The main bearish factors that exerted pressure on the market were disappointing demand and attractive US offers for HDPE film in particular. The losses in China’s PE market also contributed to the scene.

Import PE prices at a decade low

According to data from ChemOrbis Price Index, the prevailing import market levels point to their lowest levels since February 2009 for LDPE and LLDPE film on a weekly average. Data also suggest that HDPE film, which has posted the most visible losses, stands at its lowest since January 2009.

Weak China, muted end markets keep buyers sidelined

Thin trading activity in response to growing economic concerns amid the trade dispute with the US weighed on China’s PE market during August. This was despite some expectations that PE demand would pick up in the second half of August on the heels of the approaching high season for agricultural films.

Import prices posted up to $30/ton decreases this week in the country as the sharp depreciation of CNY/USD parity, high domestic stocks and lower Dalian futures market kept most Chinese buyers on hold. Moreover, a lack of support from upstream costs added to the picture as spot ethylene prices on CFR Asia basis declined by $60/ton in a week.

Another factor to limit purchasing volumes for Turkish converters was discouraging end product demand. A packager commented, “The post-Eid buying appetite from end users has been muted so far despite our previous hopes. The long absence of Europe amid summer holidays hindered our export business, additionally.”

American PE provides competitive edge for HDPE film in particular

As the trade dispute between the US and China prevailed, an influx of US HDPE and LLDPE continues to head for SEA and Turkey amid fresh capacities in the USA. HDPE film prices hit an all time low of $860/ton CFR Turkey for later shipments towards the end of this week, confirmed players.

“There is no supply worry on the horizon as the market is well fed and some materials that were on the way are arriving. We see HDPE film and LLDPE under intensifying pressure although limited import availability keeps the erosion modest for LDPE,” a player noted.

Players: Sept may see new PE declines albeit in modest sizes

“Some further price cuts are likely as supply is abundant these days and demand is not promising. Nevertheless, the size of possible decreases is hard to predict considering the already low netbacks in Turkey,” opined a packager.

Looking at the weekly average data from ChemOrbis Indexes, Turkey’s import market trades $57/ton below China for HDPE film. The discount for LDPE film is more modest at $13/ton while LLDPE c4 film only carries a premium of $26/ton over China on a weekly average.
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