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Turkey’s PP, PE and PVC markets close May on a bearish note, what lies ahead?

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 27/05/2022 (08:20)
PP, PVC, and PE prices have continued to recede as the end of May is approaching. Markets are ready to close the month on a bearish note under the shadow of slack demand amid inflationary pressures as well as tight liquidity. Meanwhile, players have already started to focus on the June outlook.

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PPH – CIF Turkey – PVC K67– Import Prices – LDPE – HDPE – LLDPE

Falling bids lead to rapid falls for homo-PP

Poor demand amid lower purchasing power and muted end markets continued to drag import PPH prices down over the week. Meanwhile, the pace of drops caught some players by surprise. They said, "We were not expecting to see such low levels before June. This proves the overall stagnancy in the market."

Both Saudi Arabian PP raffia and fibre prices have hit the $1400/ton CIF Turkey mark on the low end amid a couple of deals. As prices were assessed with $80-120/ton drops from last week, the latest weekly average pointed to the lowest level in about a year.

The falls were in line with a downtrend across global PP markets where sellers succumbed to persistently slow consumption on the end-user side. Lower propylene costs coupled with waning demand pushed Europe’s spot markets down, while China’s import market broke below the $1100/ton CFR mark given the lockdown gloom.

Sellers think that the bottom might be near after steep drops, citing optimism over reopenings in Shanghai and strong crude futures. However, sellers’ search for a bottom may be stymied by weak downstream markets amid high inflation and lower propylene costs across the board.

PVC hits new lows given persistently weak appetite

Similarly, import PVC prices added to their losses for another week as the combination of bearish June expectations and a slow construction industry kept resin purchases tied to basic needs. European K67 prices slumped to $1820/ton towards the end of the week, while Egyptian and South Korean cargos broke below the $1800/ton CIF mark.

Expectations remain weak for next month unless demand shows a major recovery. Volatile economy and elevated utility costs are likely to keep the pressure on domestic resin consumption in place, not to mention the impact of the rising USD/Lira currency. Expectedly lower ethylene contracts in Europe, coupled with the monsoon effect on India’s consumption, support this view.

Nonetheless, the planned return of Shanghai from Covid-driven lockdowns will remain under close watch. Chinese PVC makers, who have been aggressively exporting their cargos in the last couple of months, may find relief if domestic demand recovers.

"Competitive Russian and Chinese PVC cargos have played a key role in the bearish trend during the last couple of months while global activity has been hit by high inflation. We plan to monitor whether or not the influx will continue at the end of Q2," a Turkish player opined.

June PE offers expected lower on lackluster demand

PE prices have also preserved their downward trend, although the market fared slightly better than PP. Liquidity concerns, muted end markets amid inflationary pressures, and lower ethylene prices kept sentiment bearish for the coming month.

Middle Eastern offers were mostly assessed $20-50/ton lower from last week at $1800-1830/ton for LDPE, at $1520-1550/ton for LLDPE C4 film and $1480-1500/ton for HDPE film CIF Turkey, subject to 6.5% customs duty, cash. Fresh offers from the region have yet to be revealed. Buyers expect sellers to apply further declines based on lingering uncertainties about demand and June drops from a Saudi major in China and the ongoing downtrend in Europe.

Price expectations for next month were voiced at $1700-1750/ton for LDPE, $1400-1450/ton for HDPE and $1450-1500/ton for LLDPE C4 film by some players. “The rising USD/Lira currency and cash constraints may continue to weigh on domestic resin consumption. We will observe the performance of exports under the shadow of global inflationary pressures,” said a manufacturer.
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