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Turkey’s local PP, PE and PVC markets yield to subdued demand

by Merve Madakbaşı -
  • 12/11/2021 (09:27)
The locally-held markets of Turkey have responded to persistently tepid demand since November kicked off. Before, PP and PE prices reached their highest levels since around March-April, while PVC hit an all-time high in late October.

Elevated prices, record low lira curbed activity

All of these markets faced successive increases from July through October, which pushed prices to multi-month highs or even an all-time high.

According to the weekly average data from ChemOrbis Price Index, the local PP raffia market soared 43% ($700/ton), while the cumulative LDPE, LLDPE and HDPE hikes respectively reached 21.6% ($428/ton), 21.8% ($370/ton) and 19% ($305/ton) in this timeframe.

PP took the lead in the bullish rally, but PVC increases were also tremendous as the local K67 market spiked $855/ton (41%) from July to October, ChemOrbis data suggested.

Supply limitations emanating from shipping delays and sky-high freight rates in the import market coupled with vivid demand and reduced domestic supply forced consumers to pay rounds of hikes for prompt cargos.

On the other side of the coin, industry players were coping with a steep and steady depreciation of the Turkish lira against its peers throughout 2021. Surging utility costs and inflation, disruptions in the supply chain, and container shortage all created a challenging trading environment for buyers.

The dollar/lira parity tested above the 9.90 mark on Thursday, while the total loss of lira has reached 33% since 2021 started. Manufacturers have been complaining about their reduced purchasing power for some time now, particularly those who depend on domestic goods sales voiced economic woes.

*Right click the image and open in a new tab to view the full-sized snapshot.

Local Prices – PP – ex-warehouse Turkey – PE – PVC

Off-season for some applications added to the scene

Apart from a tough economy, players also pointed to the low season for certain applications including packaging, agricultural film, and tourism as another key factor to weigh on the markets.

PVC converters have been facing slowing exports in the last couple of months. They blamed their inability to reflect climbing resin prices onto their goods as Turkey has been the highest market among all others. “Indeed, the spike in parity erased our attempts to raise the prices of our goods in export markets,” complained a profile maker.

The winter season is expected to curtail PVC consumption in the short term since the construction industry will probably display a slow performance. “Buyers seemed reluctant to engage in fresh cargos during the Eurasia Window Fair amid weak year-end expectations. The colder weather may traditionally weigh on consumption nowadays,” noted a seller.

On the PP side, carpet makers have been under pressure from waning export demand in the recent months, which caused some of them to lower their running rates or even shut their factories temporarily. This has led to persistently muted demand for PP fibre.

PP pioneered discounts, PE followed suit albeit with minor drops

The softening has been pioneered by homo-PP, not surprisingly. Because this product posted the largest gains back in late Q3 and prices have been facing growing resistance from buyers since H2 October. So far in November, PP raffia and PPBC inj. prices have edged down by 2% ($50/ton) in line with trimmed import offers.

Needless to say, downward corrections in the PP market have had a spillover impact on PE. The sentiment has faltered with LDPE prices losing $40/ton from last week. LLDPE and HDPE film markets saw minor softenings of $10-20/ton on the low ends of the price assessments.

“Our LDPE sales have been visibly slower compared to the previous months and the high ends of the market have disappeared due to thin interest,” a major seller affirmed.

PVC came off from an all-time high on lower import offers

The recent downturn for PVC mirrored the fatigue that buyers have been experiencing following 3 months of relentless hikes. ChemOrbis assessed the local price ranges $30-50/ton lower this week with K67 offers even being speculated below the $2850/ton threshold in a few cases.

Players do not rule out the possibility of additional discounts for the coming days, particularly if December import prices emerge with new drops and the demand outlook remains unpromising.

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