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Turkey’s PP, PE markets open post-Eid period with a cautious tone

by Merve Madakbaşı -
  • 07/08/2020 (09:39)
Polyolefin markets in Turkey have been silent during the shortened week after Eid al-Adha holiday. Sellers’ policies were either steady or firmer from pre-holiday week depending on the product, yet cautiousness came to the forefront as the week proceeded.

The main reasons behind the growing caution lined up as below:

Ø Depreciation of lira against the USD and euro

Ø Hesitant post-Eid demand for most grades

Ø Thin appetite for distant cargos

Ø Woes over a 2nd wave of pandemic

USD/TRY parity touched a historic high on Thursday

The depreciation of Turkish Lira pervaded the markets during the last couple of weeks, while the USD/TRY parity neared as high as 7.30 on Thursday, pointing to an all-time high. Similarly, the €/TRY parity broke a record as it saw slightly above 8.60 before both eased off to some extent later the same day.

The highly volatile parity has had a large impact on polymer trading. A packager commented to ChemOrbis, “This may keep buyers sidelined with not much purchasing appetite in order to wait for parity to come down.”

Rising €/USD capped cost-driven hike attempts in euro-based offers

PP and PE sellers, who offer their cargos on euro basis, have been having hard times due to record high €/USD parity which neared as high as 1.19 towards the end of this week. Thus, a possible support from slightly firmer ethylene and propylenecontracts in Europe were neutralized by parity gains and broke the competitive power of European cargos in Turkey.

Supply-demand dynamics put pressure on PP raffia

The PP market has been on a softer trend for raffia since H2 July. The post-holiday sentiment continued to be shaped by comfortable supplies and weak demand rather than firmer costs. “Most manufacturers are covered owing to their purchases back in June and July. End demand is not that brisk, moreover," said sellers. Bids for dutiable origins moved down to $900/ton CFR Turkey in response to offers at $920-930/ton.

For PP fibre, prices were pretty much unchanged when compared to pre-holiday levels based on slightly better demand than raffia. A trader said to ChemOrbis, “Some Saudi fibre suppliers only meet the requirements of their contract based customers. Prices may follow a stable trend over the near term so long as supply does not lengthen and support from end product exports persists.”

Opposite dynamics were also mirrored in price gap between PP raffia and fibre, which widened from $13/ton in mid-July to around $40/ton in the first week of August, the weekly average data from ChemOrbis suggested.

Middle Eastern PE suppliers intend for hikes in August

Traders admitted, “Expectations for a pick-up in PE activity fizzled out as inquiries were rare. Our sales have been slow despite a lack of certain origins including US, Korean and Indian for PE film grades.”

Still, the scene for LDPE and HDPE film was more promising with players seeing small gains of $10-20/ton likely on August deals. “Some Middle Eastern producers started to seek monthly increases while we do not expect larger ones to pass on deals in fragile market conditions. Yet, LDPE and HDPE film fare better than LLDPE amid a lack of supply pressure,” noted players.

The gap between import LLDPE and HDPE is standing at around $33/ton, the widest delta since January 2020, as can be seen from the ChemOrbis graph below. This is mainly driven by a firmer trend for HDPE film.

LLDPE, HDPE b/m are weighed by increasing supplies

Turkey has been delivered an increasing amount of LLDPE cargos which were previously secured at lower prices. This coupled with muted buying interest exerted a pressure on prices for this product. “Distributors were flexible on their prices for the last few weeks since buyers went to the sidelines even prior to the holiday,” marked participants.

Additionally, HDPE blow moulding prices inched down in response to muted demand. “No one seems to be rushing to buy now that prompt availability is comfortable,” opined sellers.
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