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Turkey’s polymer markets set to start Sept on firm footing

  • 29/08/2017 (04:06)
Players in Turkey are about to celebrate the Eid al-Adha holiday on August 31-September 4 while they have already started to leave their desks as the holiday is extended due to a bank holiday on Wednesday. Not much activity is foreseen to take place during this short working week while widespread expectations for the post-holiday period hint at renewed hike requests from the suppliers of PP, PE, PVC and PS for September.

Expectations about optimistic demand along with increasing global production costs and the bullish trends in China are cited as the main factors that will boost a firmer sentiment, particularly on the sellers’ side in Turkey.

In the upstream markets, mounting supply concerns from the US, where many olefins and polymers facilities in the Gulf Coast went offline due to Hurricane Harvey over the weekend, have pushed feedstock costs up further recently.

In Europe, September monomer contracts are foreseen to settle higher as well. Meanwhile, the upward momentum in Asia is more visible as spot ethylene prices spiked by more than $250/ton in August.

In the PP market, import homo PP prices hit a 5-month high last week, according to ChemOrbis Price Index. The activity was at a standstill. Although sellers’ new high offers saw resistance from manufacturers, the offers previously forming the low ends of the ranges were not obtainable either. Players believe that a new round of increases is on the corner based on supply limitations particularly for raffia and certain copolymer grades.

“Rising costs are likely to pave the way for some hikes in Turkey after the long holiday. Sell ideas from Iranian, Indian and Saudi Arabian producers have already been voiced higher,” traders argued. PP converters, meanwhile, think that increases may not be sizeable as Turkey’s import PP market already carries a healthy premium over China.

As for PE, Middle Eastern sources postponed their announcements until after the holiday. “We expect to see further hikes considering the pressure from the bullish markets in China, where producers are able to achieve better netbacks,” a source from a regional producer noted. A converter said, “We heard that a Mid-Eastern supplier might seek $40/ton hikes soon.”

Still, some Turkish buyers anticipate only modest increases, as they argue, “Supply concerns may ease in H2 September in line with the arrival of previously secured cargoes. This may keep possible hike requests in check unless demand picks up remarkably. We refrain from engaging in long distance cargos as prices may shift direction by October-November.”

Rising ethylene costs on a global scale are also drawing a stronger picture in Turkey’s PVC market. The price targets from US producers appeared higher even before some capacities were turned offline due to the hurricane. Moreover, sellers argue, “Turkish PVC k67 buyers will need to return to the market in September to replenish some inventories considering the fact that buying interest was quite depressed during the last couple of months.”

A large trader aims to obtain higher PP, LDPE, and PVC prices blaming the firm signals he received from his suppliers in the Mid-East and the US. “PP and PE prices should theoretically move up in Turkey in September based on China and possibly higher outcome of European monomer settlements. PP and PE prices may gain $20-30/ton clearly in September, but it is uncertain to what extent hikes can pass on deals,” he stated.

In the PS market, the bullish styrene and butadiene markets in Asia and Europe have also triggered firm expectations for next month. A Turkish PS buyer commented, “Rising costs and limited local supplies will obviously give an upper hand to sellers. Some end markets are not promising, which might keep increases in check though.”

In Asia, spot styrene prices hit almost a 6-month-high while butadiene costs gained more than $400/ton throughout August. European spot styrene prices have also reached a 5-month-high recently. Meanwhile, September butadiene contracts in the region settled up €25/ton ($30/ton) month over month.
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