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Turkey’s PP market regains premium over China, PE still at par

  • 09/03/2016 (03:46)
PP and PE markets have been steadily rising since early February in Turkey in line with the return of China from the holidays on a firm note. Before that, Turkey’s PP and PE markets had been trading at par or even below China. The emerging tightness as well as returning demand in Turkey caused import PP prices to spike considerably, helping Turkey to regain its premium over China.

However, the PE market, where supply issues are less problematic and demand is less promising, is still trading at similar levels to China despite the traditional premium it should carry due to freight and volume differentials. According to ChemOrbis Price Index, PE prices have gained $50/ton on average in China and $55/ton in Turkey after having bottomed out respectively in mid-January and early February. Although players continue to expect further increases ahead, Turkey’s PE market has not shown a significant jump yet to come back into balance with China.



In the PP market, ChemOrbis Price Index suggests an increase of $90/ton for China while there is a more remarkable increase of $200/ton in Turkey in the same timeframe. Unlike in PE, it did not take long for PP prices to regain their premium over China. This is mostly because tightness concerns were in place in Turkey throughout February.



“The price gap between Turkey and China is around $120/ton considering the average import prices for dutiable origins. However, taking the $20/ton freight to ship the material back to Saudi Arabia from China into account and adding a $70-80/ton freight to Turkey, Turkey should be theoretically $50-60/ton above China based on netback calculations,” said a buyer. Therefore, an increasing number of buyers feel the recent increases have been inflated. “PP prices in Turkey have gone too much above China as sellers are trying to compensate their previous losses with huge hikes. The jumps may not be sustainable if demand cools off.”
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