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Turkey’s PP and PE markets open 2023 on firm footing due to supply pressures

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 06/01/2023 (02:41)
Polyolefin sellers applied a slew of price hikes as January kicked off, with waning availability lending support to markets regardless of feeble demand from certain downstream markets.

Indeed, PP offers extended their gains into the new year, propped up by diminishing Russian supply and elusive Middle Eastern allocations while Petkim’s firmer attitude also propelled PE higher after a two-month bearish trend.

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

Looking at netbacks, Turkey’s import polyolefin markets seem to be more or less in balance with prices in China. According to the weekly average data from ChemOrbis, the gap between Turkey and China stands at $100/ton for PPH, $90/ton for LDPE, $125/ton for LLDPE, and $140/ton for HDPE.

Delays in deliveries propel PP further higher in January

Import prices moved up further in the first week of the new year, with delivery issues from Russia and Saudi Arabia coming to the fore in the PP market.

Saudi Arabian PPH raffia and fibre prices were assessed $20-30/ton higher at $1000-1020/ton and $1070-1100/ton on CIF Turkey, subject to 6.5% duty, cash basis, respectively, as compared to late December.

Multiple players commented, “Some sellers have already been sold out for January owing to their sales back in December. Others, meanwhile, aim to lift the market to $1050/ton for raffia and above $1100/ton for fibre since they feel no stock pressure.”

A lack of pressure from Russia supports the near-term outlook

Shipment delays and logistic backlogs from Russia have been on the agenda this week as some December shipments have reportedly been postponed to January. As some players put it, the lingering operational issues since the summer have apparently brought much of the trading to a halt.

Russian raffia and fibre prices were reported at $1010-1050/ton and $1080-1090/ton on CIF, subject to 6.5% customs duty, cash basis, respectively, amid not many deals at the time of writing.

A large-scale converter opined, "We see the recent uprun as a bit artificial as some traders are willing to take advantage of disrupted deliveries with larger hikes. We believe that the market can only absorb modest gains considering mild derivative markets in Turkey and a mostly flat trend in China."

Some traders admitted that high-end prices could only work for nearing cargos or prompt materials at port.

Middle Eastern PE offers come higher, upper ends see resistance

New PE prices started to be revealed this week, while the latest levels pointed to increases of $30-40/ton for most grades. Relatively limited allocations from the Middle East coupled with the fading pressure from US and Russian supplies paved the way for modest hikes, not to mention slightly higher prices in Asian outlets.

Import Middle Eastern PE prices were assessed at $1110-1130/ton for LDPE and $1070-1100/ton for LLDPE C4, HDPE film CIF Turkey, subject to 6.5% duty this week. A converter said to ChemOrbis, “We do not plan to pay more than $20-30/ton hikes for LLDPE this month based on mixed signals from China and subdued derivative markets in Turkey.”

Saudi Arabian major trims initial hike targets

Indeed, a Saudi Arabian major has backed down from its initial hike targets, reflecting buyers’ resistance to larger price gains. The supplier revised its offers from $1130-1140/ton to $1100-1110/ton CIF for LLDPE C4 film and HDPE film late on Thursday, matching bids from customers.

Players expect more Middle Eastern PE sellers to unveil their January offers to Turkey next week, when negotiations will also take place. Limited availability is likely to underpin the market in the near term, while the size of hikes on deals will be set by demand status, as several players put it.
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