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Turkey’s PVC markets dive to a year-low, what lies ahead?

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 17/06/2022 (02:45)
PVC prices have been posting relentless declines since mid-April in Turkey, while the cumulative losses have reached 20-21% since then. The market was clearly unfazed by a short-lived recovery in China’s local and export markets earlier this month, which was triggered by the lifting of lockdowns.

This was mainly because lower consumption in the local end markets loomed over the market amid inflationary pressures and sellers were in need of cash.

CIF Turkey – Import Prices – PVC K67 – Local Prices – ex-warehouse
*Right click the image and open in a new tab to view the full-sized snapshot.

Import K67 sinks by another 10% in H1 June

Prices extended their losses into June as sellers had to succumb to thin demand. High inflation coupled with the depreciation of the Turkish lira against the USD kept activity tied to basic needs. Adding to the scene was the slowing of end markets on a local basis.
Further decreases have sent import PVC markets to their lowest levels since July 2021, the weekly average data from ChemOrbis suggested.

Non-dutiable K67 was assessed $30-50/ton lower than last week at $1600-1650/ton CIF Turkey, cash amid additional declines for Egyptian cargos as well as nearing Mexican K67 with ATR. Transactions were far and few between, at around $1600/ton. According to some players, prices below the $1600/ton mark may be available for large scale buyers.

Attempts to obtain prices at/above $1650/ton from European suppliers have failed to work despite modest volumes from the region. Indeed, PVC demand has been tepid in the region’s spot markets ahead of the summer holidays while high inflation took its toll on resin consumption despite some production hiccups.

Chinese PVC still competitive on the low end

Although some traders said export prices out of China gained ground as compared to early June, Chinese PVC K67 offers softened further to center at $1475-1520/ton CIF equivalent this week. Much lower prices at $1400-1430/ton were also heard widely for later shipments towards the end of the week.

This was despite cautiously improving sentiment right after the lifting of lockdowns in China in early June. In fact, new Covid clusters have led to mass testing and measures in some parts of the country and have cast a pall on recovery recently. July offers from a Taiwanese major are expected to emerge next week amid mixed expectations.

US offers see hefty declines amid short sales

According to some players, short sales for US K67 have accelerated, with prices breaking below the $1500/ton threshold for cargos with longer lead times.

The overall dutiable range decreased by $35-50/ton week over week to $1475-1560/ton CIF equivalent. Russian K67 was reported lower for new shipments at $1525–1550/ton, while prompt cargos fell to $1590–1600/ton FCA.

Buyers keep their purchases tied to limited needs

Buyers preferred to meet their modest needs at the low end of the market with prompt or nearing materials amid thin downstream demand at home. On the other hand, manufacturers confirmed seeing better demand from export markets.

Meanwhile, some converters plan to suspend their factories for the Eid al-Adha holiday that will be celebrated on July 9-12, 2022.

Local K67 shrinks by more than $500/ton in 2 months

The bearish import trend found a reflection on the locally-held PVC markets amid sellers’ aim to boost their sales. PVC K67 broke below the $2000/ton inc VAT threshold amid some deals for domestic materials. The overall range was assessed $30-40/ton below last week at $1980-2080/ton ex-warehouse Turkey, inc VAT.

Both distributors and the domestic producer, Petkim, continued to adopt a flexible pricing policy in case of bids from buyers. A player said, “K70 supply appears comfortable while demand remains weak.”

Short-term sentiment remains weak

The market lacks confidence about the demand outlook for the near term, while the medium-term outlook appears blurry. The foggy scene stems from the uncertainties about the sustainability of a recovery in China and the next policy of the Taiwanese major amid the monsoon season in India.

Tepid activity in Europe coupled with low global demand for US cargos amid troublesome logistics causes buyers to think that decreases in Turkey might not have come to a halt. Adding to the scene are economic volatility and the nearing Eid al-Adha holiday in July.

A profile maker said, "Last year, the market spiked right after the holiday, but consumption levels are not supportive of a rebound now. We plan to monitor global supply."
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