Turkey’s PE market under downward pressure from China
This week, LLDPE film offers for Iranian origin were down by $40-50/ton to $1410-1420/ton while HDPE offers were $10-20/ton softer at $1510/ton for film and $1410-1440/ton for blow moulding, all CPT, subject to 6.5% duty. As for Middle Eastern origins, offers were notionally reported at $1460-1500/ton for LDPE, $1470-1500/ton for LLDPE and HDPE film, all CIF, cash, subject to 6.5% duty. PE prices from the region are expected to face downward pressure in Turkey based on the netback to China.
In China, PE prices posted some decreases over the past week because of disappointing demand and Chinaplas Fair which caused many players to be away from the market. In the import PE market, offers for Middle Eastern LDPE film and LLDPE film both softened $30/ton on the low end to be reported at $1390-1460/ton and $1300-1360/ton, respectively while HDPE film prices edged lower by $10-40/ton to $1310-1370/ton, all on CIF China, cash equivalent basis.
Netback calculations based on China reveal that PE offers for Middle Eastern origins have some room to move lower in Turkey. Deducting a $20/ton freight rate to bring the material back to the Middle East and adding a freight rate of around $80/ton to ship the material to Turkey, Middle Eastern origins can be theoretically offered at $1450-1520/ton for LDPE film, $1360-1420/ton for LLDPE film, $1370-1430/ton for HDPE film on CFR Turkey basis.
Yet, the ongoing PE tightness in Europe and the expectedly higher ethylene contracts for June may curb the downward pressure exerted by China on the Turkish PE market. Therefore, players do not think that new Middle Eastern offers will come with large decreases.
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