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Turkey’s PP, PE markets look for direction amid opposite factors

  • 31/08/2018 (07:59)
Turkish players have not fully returned to their desks following Eid-al-Adha as many opted to extend their holiday until September. Not only the persisting currency risks and challenging economic conditions but also a national holiday on Thursday added to the widespread waiting mood in the polyolefin markets this week.

As for PP, the local and import markets followed opposite paths in the post-Eid week. Cash constraints and stock pressure on part of some resellers resulted in visible discounts in the distribution channel versus overseas suppliers’ slightly higher sell ideas for September.

Regardless of the trend in China’s PP market, buyers and sellers agreed on the idea that import prices in Turkey have no further room to decline based on the prevailing import offers in China. Low stock levels on part of converters may hinder further erosion of prices, according to sellers. According to ChemOrbis Price Index, Turkey’s premium over China’s import PP market stands at as low as $15/ton on a weekly average.

“Although demand has not fully recovered, we started to receive some inquiries,” said a seller. Meanwhile, a PP converter noted, “We are not planning to resume production before next week. New offers should at least be at par with the levels in China. Yet, the economic volatility would prevent visible increases from materializing on September deals.”

The PE market is ending August on a weaker tone compared to PP. “Suppliers even refrained from voicing their sell ideas for September as they are under the opposite pressures of poor netbacks and blurry state of demand,” commented a player. Some buyers reported that they will soon need to buy some volumes to meet their moderate needs. However, they don’t plan to rush as currency risks persist and many sellers insist on receiving their payments on cash.

Now that regular Middle Eastern suppliers postponed their fresh price announcements until next week, expectations hint at mostly rollovers. A few PE buyers said, “We may initially see rollovers from sellers before small discounts in the latter part if activity stays hindered. More US HDPE cargos may arrive to Turkey in the coming term due to US-China conflict, moreover.”

However, Turkey’s import PE market is already trading below China, which keeps most expectations on the side of stability, at least. According to ChemOrbis Price Index, prices in Turkey carry a discount of $30/ton for HDPE film, LDPE film and $20/ton for LLDPE film.

Furthermore, Mid-Eastern producers have already attempted to lift September PE prices to Asia, which could support the market to some extent, along with steady September ethylene contracts in Europe.

A PP, PE trader commented, “Polyolefin markets are in a dilemma right now. Either case, the business volume will apparently scale down both for products, as all polymer markets have been hit hard by the sharp depreciation of the Turkish Lira.” The Turkish Lira/USD parity has lost around 40% value since the beginning of 2018 amid the political and economic tensions with the US.
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