Turkey’s PP, PE markets evaluate possible impact of border closure with Iran

On February 23, Turkey closed its four land border gates with Iran as a preventative measure against the coronavirus outbreak. The reaction of polymer markets has been thin so far, however, due to the emergence of alternative supply sources.

Railway and road crossings have been closed, while flights to Iran have been cancelled due to a rising death toll in the eastern neighbor. Traders working with Iranian polymer producers commented to ChemOrbis, “Deliveries from Iran may remain suspended until mid-March, in the best scenario.”

Traders: Disruption may lend some support to PP fibre, HDPE

Polyolefin prices in Turkey eased down in H2 February under a pressure of price drops for import cargos in virus-hit China . Polymer demand in China was poor amid accumulating stockpiles for domestic materials following a prolonged holiday. The manufacturing industry has been resuming production.

Not only a growing premium over China but also an increased number of offers for irregular origins and hesitant buying interest weighed on March expectations in Turkey. This was following a bullish trend that lasted around one and a half months.

It is a common opinion that curtailed supply from Iran may trim possible price cuts for certain products including PP fibre and HDPE, albeit to a limited extent. The bearish factors may mitigate the impact of Iran’s absence, manufacturers argued. An agent of an Iranian producer said, “If borders stay closed longer than we think, buyers may return to the market to ask for material.”

Iran ranked Turkey’s fifth largest polymer supplier during 2019, data from ChemOrbis Import Statistics suggested. It was the second top HDPE and the third largest LLDPE supplier of Turkey.

Higher freights may provide support for Iranian sellers

Freight rates from Iran to Turkey are expected to rise ahead of Newroz festivities on March 20-23. “Borders may remain shut for around 7-10 days, we believe. If the duration of the closure lingers, prices from Iran would firm up regardless of muted demand in Turkey. Yet, we doubt that higher offers would see acceptance,” opined a player.

Speculations on Uzbek PE supply

Some players claimed that deliveries from Uzbekistan also halted in line with border closure with Iran. A converter disagreed, “Uzbek cargos are shipped from two ports in Russia and Georgia. Anyhow, not much volumes have been directed to Turkey from Uzbekistan during the last couple of months. Thereby, we don’t foresee a notable change in the situation.”

Buyers: Irregular origins to mitigate the impact of lower Iranian supply

Import PP and PE markets have been witnessing an increased number of Asian offers in tandem with tepid activity in China and Southeast Asia this month.

Initial PP raffia and LLDPE offers emerged from Malaysian PrefChem , while prompt Azerbaijani cargos from SOCAR’s new plant pervaded the HDPE pipe black market. Korean PP raffia prices showed up in addition to initial HDPE film offers from the newly launched Russian and South Korean plants, all providing attractive options for buyers. Moreover, Saudi Arabian NATPET resumed offering PP fibre to Turkey after more than a year.

“The halted deliveries from Iran on the top of some PP, PE turnarounds in the Middle East and Egypt will be counterbalanced by increased supply from Asia. Plus, the continuing depreciation of TRY against USD weigh on end demand in Turkey,” a converter commented. Meanwhile, buyers think that PP raffia and HDPE markets may face larger declines when compared to other grades.