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Turkish PP, PE markets enter Eid holidays on weak note

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 09/08/2019 (04:07)
Muslim countries are readying to celebrate Eid al-Adha soon while Turkey’s polyolefin markets have displayed weak pricing trends during the last week before the long holidays. The main factors that weighed on the atmosphere included mild demand, shrinking oil markets and a weakening in China in response to intensifying trade tensions with the US.

Crude futures sank by 7-8% on week

Oil prices plunged by more than 4.5% on Wednesday, sending the markets to their lowest levels since January. The recent drops were partly driven by an EIA report indicating the first stockpile build-up in US crude inventories in almost eight weeks. The re-escalating trade war between the US and China also weighed on the market.

According to ChemOrbis Price Wizard, the weekly averages of NYMEX (WTI) and ICE Brent Europe benchmarks indicated a sharp decline of 7-8% week over week.

European monomer contracts fail to prop up market

Earlier in the month, players expected that stable to slightly higher olefin settlements in Europe could prop up the market or help offers stabilize. This projection has faded recently under the shadow of global trade concerns and holiday lull.

Subdued demand pervades PP market

Import PP offers edged down by $10-20/ton week over week as the PP market has yielded to the pre-Eid lull and the softening in China’s import market. According to ChemOrbis Price Index, import homo-PP prices in Turkey are trading $40/ton below the levels in China on a weekly average.

“Several converters seem to be covered until September which may pave the way for further discounts after holidays, albeit in small amounts due to Turkey’s growing discount over China,” a large trader opined. Most manufacturers are set to close their factories for holidays with fibre buyers affirming, “We are not planning to resume operations before August 19.”

Middle Eastern PE sources issue monthly drops for Aug

Regional suppliers, including a Saudi Arabian major, approached the market with lower price announcements. The latest prices indicated decreases of up to $40/ton from July.

Sellers admitted, “Buying appetite has been quite depressed heading to holidays. The weaker trend in China and comfortable supplies also pushed buyers to the sidelines. LDPE performs relatively better than LLDPE and HDPE, nonetheless.”

US PE cargos offer competitive edge

Middle Eastern PE sellers have been facing pressure from competitive American prices along with waning demand in Asia and comfortable stocks. “Our customers justified their lower counter bids with more competitive European and US cargos that fed the market in the recent weeks,” a producer source noted.

What lies ahead for post-Eid?

The PP and PE markets might open the post holiday period on a soft note so long as the weak trend in China prevails during the absence of Muslim countries for long holidays amid the deepening trade war, lower oil prices, rising domestic stocks, falling CNY and slack activity.

Turkey’s lack of premium over China coupled with the recent end of bearish trend in Europe may prevent drastic drops, traders argued.

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