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Turkey’s PP, PE markets face short supply from Europe

by Merve Madakbaşı -
  • 29/01/2021 (09:07)
Polyolefin producers have postponed their official February offers to Turkey until next week. This is not caught by surprise since a growing tightness and strong expectations for new olefin contracts draw a bullish picture in nearby Europe and lend support to sellers for the near term.

Expectations in Turkey’s import PP and PE markets were expressed in a firm tone for most grades as January wore on. A lack of major supply issues in the prompt market coupled with relatively subdued demand kept the outlook less strong for HDPE film and PPH raffia, in the meantime.

Flow of European cargos will to be reduced in February

This week, an increasing number of players voiced their concerns regarding possibly reduced availability from Europe for the new month. The scarcity of spot volumes and higher projected olefin settlements triggered expectations for hike requests between €100-200/ton inside the region.

The European polyolefin markets had failed to catch up with global PP, PE hikes for the most of Q4 2020 before the post-Christmas demand and rising upstream chain helped the upturn gain momentum in January. Prices generally regained their premium over other markets in the last weeks owing to supply constraints.

Traders said, “Serbian, Czech and some South European sources will not be able to provide allocations to Turkey due to vivid demand and a reinforced tightness amid planned/unexpected shutdowns in their own markets.” The expected round of hikes may grab more import cargos to Europe amid improving netbacks and keep availability low for Turkey, players believe.

Turkey has lacked much volume from the Middle East, USA, India and South Korea since late 2020. This was mainly due to sky-high freights from Asia, a global container shortage amid the pandemic and buoyant demand for export material in North and South America.

Last week, suppliers expressed their intentions to maintain their firm pricing policies for the majority of PP and PE grades into February. This was despite Turkey’s large premium over China’s import market while sellers counted on the ongoing logistic disruptions and some turnarounds that are set for February and March in the Middle East.

“Freights prevented exporters from taking advantage of the arbitrage to Turkey. This is why the record-high netbacks failed to grab more import cargos,” players agreed.

According to the weekly average data from ChemOrbis Price Index, overall import prices are carrying a premium of around $250/ton for PP raffia, $140/ton for LDPE and $180-190/ton for LLDPE C4 film, HDPE film over China nowadays. Part of these large price gaps with China stemmed from freight differentials while they continue to keep Turkish players on their toes for the medium term.

Players: PE will be affected more than homo-PP

European volumes counterbalanced the absence of Middle Eastern and US sources to some extent in Turkey late last year, especially for LDPE and HDPE film, b/m. The recent tightness is likely to provide support for the LDPE market, in particular.

“PP fibre, injection and PP copolymer markets will retain their strength on better demand and modest supply from Asia, the Middle East and Europe. Meanwhile, LLDPE may see larger gains among all PE grades amid a lack of pressure from the top supplier of Turkey, the USA,” a participant noted.

Still, some buyers hope that Iranian suppliers may focus on feeding Turkey a bit more once Chinese buyers leave their desks for New Year holidays in the middle of February.

Data from ChemOrbis Statistics suggest that Belgium was Turkey’s third largest PP copolymer supplier in January-November 2020 with more than 44.000 tons of material.

Similarly, three out of five largest LDPE exporters to Turkey were European sources, including Belgium, Germany and Spain with a combined volume of almost 75,000 tons in the same period. Turkey imported more than 25,000 tons of LLDPE from the Netherlands, which puts the country to the fourth place in the list of top 5 exporters to the country.

To track Turkey’s imports by country, please click here (For members only)

To track Turkey’s imports by product, please click here (For members only)
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