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Turkey’s PVC market in flux amid calm demand, reduced supply

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 16/09/2022 (05:45)
Import PVC prices have moved sideways recently as the market has been balanced between lower supply and limited consumption in Turkey. The easing supply pressure encouraged sellers to adopt firmer pricing policies, which lured buyers back to the market earlier in September. Nonetheless, hike attempts appear to have failed due to subdued end demand.

CIF Turkey – Import Prices – Local Prices – Ex-warehouse Turkey – PVC K67

Poor netbacks deter sellers from offering to Turkey

The absence of regular suppliers, including European, Mexican, and Russian sellers, has propped up the sentiment on the side of sellers since September started. Not only were there lower production rates or scheduled turnarounds among PVC producers, but also poor netbacks in Turkey led to lower export volumes to the country.

The weekly average data from ChemOrbis revealed that Turkey’s duty-free K67 market traded about $750/ton below European spot markets as of mid-September. Turkey’s premium over China’s import K67 market stood at $100/ton while the gap with Southeast Asia was at $80/ton. The premium over India has been as low as $30/ton.

Drops from Taiwanese major cast a pall on US hikes

Traders have attempted hikes for American PVC cargos since last week. Following purchases as low as $850/ton CIF Turkey, offers at or above the $900/ton mark emerged but failed to grab interest, as sellers admitted. A manufacturer said, "US producers have been exporting EDC to Europe, where players suffered from elevated electricity costs and lacked sufficient upstream output. This might have paved the way for firmer US PVC offers."

Apart from fading demand, a Taiwanese major’s lower prices for October in Asia have cast a pall over hike attempts by US PVC suppliers. A key US producer offered steep discounts to China this week following the news.

Similarly, hike attempts for Egyptian cargos have been short-lived given waning activity. An Egyptian producer lifted its export offers to Turkey following aggressive sales back in August. Nonetheless, the recent hikes failed to find acceptance and some traders confirmed revising their prices back down to $950/ton CIF Turkey this week.

Will freight slump lure Chinese producers back?

Adding to the lower allocations from several PVC producers, Chinese PVC prices to Turkey have been scarce as compared to the summer months. Offers have been few and far between, with levels of $1050-1100/ton being found unworkable.

Players have been questioning whether or not Chinese producers will resume their offers in the coming term, considering that freight rates from Asia to Turkey have plummeted further. A global trader admitted, “These cargos have not been found workable even if they are with break-bulk shipment terms. Traders refrained from engaging in these distant cargos as they are not confident about demand in Turkey for Q4.”

Some players expect Chinese sellers to divert more cargos to Turkey in the coming term based on plunging delivery costs, particularly if demand does not show a solid revival in India amid pending duties on this origin.

Russian PVC offers re-emerge after weeks

Russian materials re-surfaced, albeit tentatively, with a few offers standing at $1000-1020/ton CIF, subject to 6.5% duty. “These levels do not appear attractive as compared to American cargos,” players concurred.

Two Russian producers reportedly resumed operations at their plants while another was on schedule to restart in October. Some traders voiced their concerns that Russian PVC may return to the Turkish market by October amid the recent and pending restarts.

Local PVC K67 prices up 5% in a month

Diminishing local and import supply bolstered Turkey’s local K67 market this month, not to mention Petkim’s firmer pricing policy. The domestic producer is currently conducting a planned turnaround at its ethylene cracker while its downstream PVC production has not been affected so far, a company source reported to ChemOrbis.

ChemOrbis data suggested that the locally-held PVC K67 market has gained 5% ($70/ton) since mid-August with prices below the $1400/ton inc. VAT mark becoming rare. Prices slumped by 46% ($1185/ton) on a weekly average from March to August.

Foggy outlook for the coming term

Near-term expectations are for markets to move largely sideways, with no dramatic up-and-down movements, largely due to a balance between supply-demand fundamentals.

The lingering energy crisis in Europe, lower prices from a Taiwanese major to Asia for the sixth month in a row, already low netbacks in Turkey, and the uncertainties about material flow keep players away from making predictions regarding October.

The post-monsoon performance of Indian demand will be a key factor to monitor. Whether or not Chinese and Russian sources will return to Turkey amid low netbacks will also be under close watch in the coming weeks.

In the long run, players hope that the recent and huge social housing project designed by Turkey’s Ministry of Environment, Urbanization, and Climate Change will boost activity to some extent.
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