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Turkey’s PP and PE markets move up, but riddled with uncertainties

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 09/10/2020 (04:05)
Polyolefin prices in Turkey have followed a firm trend as the markets were mainly supported by limited supplies from Middle Eastern producers. Yet, Golden Week in China coupled with the depreciation of the Turkish lira against its peers has kept cautiousness in place.

Limited supply from the Middle East, US supported sellers

Middle Eastern PP and PE producers have sought monthly increases, blaming their limited allocations and the need to improve their margins. “Most of them are feeling free from stock pressure owing to their bulky sales to China previously,” opined a participant.

Meanwhile, Chinese players have been out of the market to celebrate Golden Week holiday. This has prompted relatively more offers to find their way to Turkey this week although they were not for large quantities.

New shipments from the USA have remained quite scarce, moreover, in sync with troublesome production in the Gulf Coast. The region is readying for a landfall of Hurricane Delta by late this week, which is most likely to keep US PE supplies tight.



Rising USD stalled activity

A week-long holiday in China coupled with the depreciation of the Turkish lira has been keeping overall buying activity tied to needs. The record high USD/Turkish lira parity has added to the waiting stance on the side of buyers for another week.

“Mostly nearby materials see interest from customers. Buyers deem distant cargos as risky since a lack of clarity from China as well as muted Europe amid rising infections influences the outlook. It remains to be seen whether or not China will face pressure from rising domestic stocks after holiday,” commented players.

PP

PP buyers consented to modest gains

Import markets have gained $38/ton for PP raffia (3.8%) and $20/ton (less than 2%) for fibre since late September, the weekly average data from ChemOrbis revealed. On a weekly basis, Middle Eastern ranges gained $10/ton between sellers’ firm stance and mild demand.

Middle Eastern sources were adamant at their higher prices while Russian suppliers followed suit as they were already sold out for October. Right before China holiday, Turkey regained its premium over this major market yielding to an ongoing upward pressure and restocking activity.

Nonetheless, sources concurred that demand for non-woven and BOPP has tapered off compared to its peak at the height of the pandemic in Q2.

PE

HDPE fared better than other PE grades

Regular Middle Eastern suppliers announced monthly increases of around $20-50/ton to Turkey. Sellers admitted, “LDPE and LLDPE C4 film can absorb smaller hikes as local materials are favored over import cargos nowadays. Yet, relatively limited supply and slightly better buying appetite provided additional support for HDPE film.”

“Our negotiations with a Saudi Arabian major are yet to kick off. There is probably room for slight discounts from their initial announcements, particularly for LLDPE C4 film,” a packager said to ChemOrbis. Supply-demand fundamentals may drive grade-specific trends in the coming weeks for polyethylene.

Eyes on post-holiday scene in China

So far, modest import supplies for certain origins have warded off demand gloom to some extent in Turkey. Looking ahead, the post-holiday view in China is set to be monitored closely as it will play a key role in setting the market tone.

Players argue that the fact that Turkey and China are back in balance may hinder additional increases in Turkey in case of a weak return of China. “No major changes seem likely for the rest of October now that Turkey has regained some premium over China. Prices may even level off as the month proceeds if trading stays at bare minimum,” argued a buyer.
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