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Turkey’s PET markets on uptrend, yet cautiousness persists

by Merve Madakbaşı -
  • 23/10/2020 (10:48)
PET prices in Turkey have been showing an upward trend recently in response to higher freight rates and feeds. Sellers had also attempted for increases in the previous months, but firmer goals had fizzled out shortly after as demand was hit hard by pandemic across the board.

Local PET bottle gained ground on the low end

Players report that local PET bottle prices below the $800/ton ex-warehouse Turkey, not inc. VAT threshold became sporadic this week. Domestic producers adopted a steady to firmer pricing policy based on higher PTA and MEG costs which led to small hikes in Asian markets.

A converter shared this view, saying, “We heard that a major US producer declared a force majeure on MEG supplies. This may have also driven MEG prices higher.”

“Our stocks have relatively diminished. If any buyers ask for bulky quantities of material, we would be unable to provide,” a source from a local producer commented to ChemOrbis. Yet, he admitted that demand has yet to respond much to firmer offers so far.

Firming for PET textiles entered the 2nd successive week

PET textile chips and POY (Partially Oriented Yarn) prices sustained their increasing trend propelled by rising freight rates from Asia. Import Asian POY offers (300-500 Denier) at and slightly above the $800/ton CFR Turkey threshold proved workable after weeks of failed attempts from suppliers.

Prices were propped up by slightly better demand amid rising costs and shipping fees starting from mid-October. The reduced availability from import suppliers added to the firming as a player put it: “Indian and Malaysian producers are free from stock pressure for certain grades with some of them being unable to give a timetable for next shipping.”

In addition to supportive feedstock costs, players pointed to improving carpet exports to the US, in particular, as another factor that contributed to the modest firming.

Textile chips prices moved above bottle grade

Import PET bottle prices firmed up by $10/ton from last week, tracking higher feeds.

Meanwhile, hikes lagged behind the firming in polyesters. As can be seen from the ChemOrbis graph below, import PET textile prices moved above offers for bottle grade on a weekly average, unlike the tradition.

Under normal circumstances, PET bottle prices should carry a premium of around $20-30/ton over textile chips.

A polyester manufacturer commented, “We expect the market to start November on a firm footing. Yet, price gains would not be dramatic.”

Markets struggle to shake demand gloom

Nonetheless, the combination of seasonal factors and growing concerns over rising COVID-19 cases across the board weighs on the sentiment for PET for the longer run. “We are not that confident about demand outlook for the last quarter of 2020 since mounting concerns over possible restrictions buffet sentiment. Still, supportive costs may hold the market close to the prevailing levels,” opined a player.

PET has been hit hard by the pandemic since earlier this year due to virus-induced restrictions, the cancellation of mass gatherings and festivities worldwide. “Bottle demand remains weak in sync with low season, while food packaging is doing okay,” a seller opined.

Players discuss sustainability of cost-driven gains

With all these divergent factors in mind, some PET players voiced their skepticism over the sustainability of the recent firming. “Gloomy demand outlook has prevented larger price gains considering the signals of resuming restrictions from several countries amid surging infections coupled with the start of off-season for certain applications,” marked a participant.
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