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Turkey’s PP, PE markets head for Oct hikes on freight pressure

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 24/09/2021 (02:48)
Polyolefin prices in Turkey have maintained their up-run as the end of September rapidly approaches. Shipping bottlenecks have been the primary driver of the upward trend, while end markets have been mostly subdued. Still, October calls for renewed increases under upward pressure from surging freight rates worldwide.

Markets about to close September on firm note

Shipping delays have permeated through Turkey’s polymer markets over the most part of Q3, which have led to incremental price hikes for various resins. Import PP and PE prices extended their gains into September as soaring shipping costs from the Middle East came on top of the already tight Asian volumes into the country.

*Right click the image and open in a new tab to view the full-sized snapshot.

Import – CIF Turkey – PP Raffia – PP Fibre – LDPE – LLDPE – HDPE

Import PP raffia and fibre offers from Saudi Arabia have risen by $70-110/ton (4-7%) since September kicked off, the weekly average data from ChemOrbis suggested. PP raffia hikes surpassed those of PP fibre in the wake of muted demand for the latter one amid the slowing carpet business.

Delayed deliveries from the Middle East coupled with the absence of Russian and Egyptian suppliers provided an upper hand to PP raffia sellers, indeed.

As for PE, Middle Eastern producers achieved notable hikes, particularly for LLDPE and LDPE, throughout September amid vivid demand and tightness. According to ChemOrbis data, LLDPE C4 film and LDPE film have gained $75-90/ton (5-6%) so far this month, while HDPE film has increased $50/ton (4%) as demand lagged behind the first two products.

“US suppliers have already been out of play for months, while Iranian and Russian sellers have also reduced allocations to Turkey. South Korean and Indian origins have been far from offering a competitive edge amid unfavorable delivery costs,” a PE consumer complained.

Not much supply relief on the near horizon

Players rule out the possibility of a visible relief in availability in the short term. This is because shipping bottlenecks continue to pervade global commodity markets and may not ease much until sometime next year. It remains to be seen whether or not unsupportive end markets will retain prices of certain grades from rising much further, meanwhile.

Freights from Saudi Arabia to Turkey have neared $300 in some cases, as busy maritime traffic from China to the US ahead of the Christmas holidays kept container shortages in place. "PP fibre converters have been torn between a lack of containers and slow export orders. Most consumers elected to reduce operating rates as they are struggling to send goods to their customers, which led to a pile of inventories. In addition, they have been suffering from delays in deliveries of their PP cargos from July and August.

Fresh offers may start to surface next week

Regardless of the state of end markets, PP and PE consumers tried to replenish their stocks over the month to hedge against renewed hike requests from suppliers in October. Buyers expect to hear higher polyolefin offers, starting from late September.

"The spillover impact of logistic snarls will probably pave the way for a new round of price increases for next month. Yet, demand may come to the fore more in setting the trajectory in late Q4," a converter said.

Some players think a lack of support from end markets of carpet, textiles, and packaging may mitigate the impact of supply concerns to some extent in the medium term, but not in October. "So long as freight continues to block alternative PP and PE cargos into Turkey and cushion the impact of regular suppliers’ absence, prices in Turkey will remain elevated," argued a trader.

In terms of pricing, better demand for PP raffia and non-woven is expected to propel prices higher next month, as a buyer put it, "PPH raffia prices may move above the $1700/ton CIF threshold, on the assumption that Saudi Arabians will keep allocations restricted due to unstable shipping costs." PP fibre sellers will also be forced to seek increases amid a slew of freight-induced supply issues.

Middle Eastern PE suppliers are projected to apply notable hikes, with some players saying, “LDPE may test around $1750/ton CIF, while LLDPE C4 film will near $1550/ton given an ongoing tightness for material with additive.”
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