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Turkey’s PP, PE markets influenced by Europe’s bullish trend

  • 03/03/2017 (08:54)
Import PP and PE prices have been on an upwards trend for nearly the last three months in Turkey. This was mainly driven by supply limitations from the Middle East along with supportive costs. With the start of March, Turkey’s polyolefin markets are likely to sustain their firmness as they are now influenced by a new round of hikes in Europe. This is despite the weaker Asian markets, especially in China.

In Europe, March monomer contracts settled up €50/ton for propylene and €30/ton for ethylene on the back of rising spot values during February as well as scheduled or unexpected cracker shutdowns across the region. Soaring settlements paved the way for refreshed hike requests from downstream PP and PE suppliers in the region. Two West European PP producers are set to ask for €100-150/ton increases for PP, while PE sell ideas emerged with up to €80/ton hikes for March, so far.

“We expect to hear higher March PP and PE offers from Europe in tandem with bullish developments in the region. Our Central European PP supplier already applied an increase due to higher propylene costs,” a distributor in Turkey stated.

On the part of buyers, a pipe manufacturer in Turkey noted, “Our European HDPE pipe supplier told us that they have limited amounts to offer until April.” A converter received a €40/ton higher LDPE general purpose price from South Europe compared to the last February deals.

However, Asian PP and PE markets displayed an opposite trend, particularly in China, where disappointing post-holiday demand weighed down on prices. China’s polyolefin markets are said to be struggling with high inventory levels as several factories resumed operations slowly following Lunar New Year holidays. Under these circumstances, re-export PP cargos from China are weighing down on Southeast Asia, although the region is not performing as poorly as China.

Turkey’s PP market level moved above China by early January following a period of three months when it had traded below the levels in China, according to ChemOrbis Price Index. Moreover, LDPE film prices in Turkey reached par with China’s import levels by around mid-February before gaining a premium over that market this week, the first time since around six months.

Some buyers in Turkey argue that import PP and LDPE film offers should be seeing some corrections after March especially if demand winds down and supply constraints ease in general noting that they are now well above the levels in China. The delta between the two markets is around $145/ton for homo PP and $75/ton for LDPE nowadays, according to ChemOrbis data.

“PP availability from Iran and the Middle East might remain short for a while more. Shipments from Iran have already started to face disruptions due to approaching Newroz Holiday with freights to Turkey posting gradual increases since February. These factors are set to sustain the firm scene in Turkey over the short term,” traders comment.

A more cautious upwards trend is observed for PE in Turkey. Some players opine, “Turkey has been offering higher margins in the last couple of months. This may attract more allocations from regular Middle Eastern sources over the coming weeks which would ease tight LDPE supplies. For HDPE and LLDPE, supplies are already sufficient owing to various available origins including Uzbek, Korean, Egyptian and Iranian. Consequently, we believe that PE prices may see rollovers or modest gains on deals this month.”
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