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Turkey’s PP, PE markets open February on firm footing

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 04/02/2022 (02:53)
Import polyolefin markets moved higher for most products on the heels of surging costs and the end of power curbs. Most importantly, the end of power curbs boosted buying interest for the new month. Low netbacks in Turkey repelled some PE suppliers, which helped the market reverse course in February, while a lack of Iranian and Asian sources continued to bolster PP.

Optimistic expectations about the post-holiday demand in China, a lack of competitive American or Asian offers, logistic mishaps, and higher crude oil futures are likely to support the sentiment in Turkey unless a new round of electricity cuts appears and halts activity going forward. It will be for demand to decide about to what extent increases will pass through February deals as the size of gains may vary depending on the product. Activity for PP fibre and LLDPE still lags behind other products for now.

Saudi Arabian major lifts PP, PE offers

After announcing monthly hikes to China prior to the New Year holidays, a Saudi Arabian major issued increases to Turkey for most products. Accordingly, the producer’s new PP raffia offers emerged at $1530/ton CIF Turkey, subject to 6.5% customs duty, cash with deals at $1500-1510/ton. This level stood well above the deals at $1400-1420/ton in early January.

As for PE, the seller lifted its offers by $40-50/ton for LDPE film and HDPE film, while their LLDPE C4 film prices were rolled over from January.

The supplier was quite aggressive in the last month of 2021 and early January due to their comfortable stocks and cautious demand in global markets. However, the upturn for PP coupled with the rising polyolefin markets of China changed their pricing policy in February.

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

PP adds to its gains due to limited supply sources

Turkey’s import PP market has lacked fresh offers from Iran for some time now. Some players attributed this to rising freight rates and harsh weather conditions, as well as healthy domestic demand in the neighboring country. "Iranian offers have been found unworkably high, which has caused traders to turn to other origins if they can," opined some players.

Adding to the scene has been the absence of Chinese and South Korean suppliers in response to elevated freight rates and container shortages from Asia to Turkey. The Chinese New Year holiday also prevented fresh offers from the region to Turkey this week. Traders affirmed that South Korean PPBC injection offers came in $50-100/ton higher, in line with expectations.

Saudi Arabian PP raffia and fibre offers were assessed $10/ton higher week over week at $1500-1520/ton and $1540-1560/ton, respectively CIF Turkey, subject to 6.5% duty, cash, based on transactions. PP fibre prices at/close to the $1600/ton mark were also heard, although no deals have been confirmed at these levels at the time of press. Raffia prices at $1530/ton have yet to turn into deals, either.

Low netbacks in Turkey repel LDPE sellers

Middle Eastern PE offers have started to be revealed by mid-week although not all producers have returned to the market for the new month. In the LDPE market, regional suppliers seemed unable to provide plentiful volumes as they preferred to sell to more profitable markets, including Europe, Africa, and India, or cited turnarounds at their plants. Higher spot offers from the local producer, Petkim also propelled the market.

Similarly, US PE offers have been sporadic since H2 January. Exports from the USA were said to be curtailed by harsh weather conditions and backlogs at pandemic-hit ports in the country. Adding to the scene has been better netbacks in other PE outlets and rising ethylene contracts in the USA. A global trader reported to ChemOrbis, “American sellers prefer to direct their cargos to Europe due to better netbacks.” A PE converter agreed, saying, “We were told that US LLDPE grades are tight in terms of supply.” Indeed, US PE sellers adopted an aggressive policy in major markets in late 2021 and early January amid destocking activities.

HDPE film, b/m demand remains supportive

Import PE sellers reported improved LDPE inquiries following power curbs that hit Turkish manufacturers in late January. Plus, demand for HDPE film and b/m continued to be satisfactory, as was the case last month. For LLDPE, however, firmer price attempts received a lukewarm response from consumers amid more competitive Russian cargos. Moreover, demand was not as active as for HDPE film or LDPE, multiple players said.

Overall, Middle Eastern import offers were assessed $40-50/ton higher at $1580-1600/ton for LDPE, stable at $1400-1430/ton for LLDPE C4 film, and $20-40/ton higher at $1370-1400/ton for HDPE film CIF Turkey, subject to 6.5% duty based on announcements from some producers.
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