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Turkish PP and PE players voice bearish expectations for May

by Merve Madakbaşı -
  • 23/04/2021 (04:00)
Import polyolefin prices witnessed pull-backs during April as stagnant demand pervaded the Turkish markets. Resistance toward multi-year high prices became more evident once the holy month of Ramadan started. Recently, May expectations have also taken a shape under the pressure of weak factors.

“Import PP and PE prices have further room to decrease as the recent drops were modest considering the price rally during February and part of March. Discouraging end product demand and buyers’ inability to cope with high shipping and resin costs will keep purchases hand-to-mouth until prices come back to reasonable levels,” said a player.

Import – CIF Turkey – PPH – Raffia – Fibre – LDPE – HDPE –LLDPE

Demand may remain unpromising until after holiday

Poor demand from Turkish buyers amid weak expectations for May has been the main factor that weighed down on PP and PE offers in April. The ongoing Ramadan, lower purchasing power of converters, ample prompt supplies and fears about more extensive measures against the rising infections across the country have kept activity quite cautious.

A lack of supply concerns for the short term coupled with mild end markets amid liquidity issues, volatile Turkish Lira/USD parity and the outbreak keeps the demand outlook depressed for May. “Activity may not show a visible recovery until after Eid al-Fitr holiday that will be celebrated in mid-May. Sellers will face sluggish buying interest for another month,” opined participants.

Lower Middle Eastern offers are around the corner

As for PP, new offers from Saudi Arabia are projected to come lower as traders already pioneered some drops due to their need for cash. Producers are expected to yield to buyers’ resistance and the downward pressure from traders’ competitive prices.

In early April, Saudi Arabian suppliers kept their discounts modest before the pressure from other origins grew in the second half of the month. Indeed, import Chinese, Russian and Iranian PP raffia prices from traders already broke below the $1700/ton CIF/CPT Turkey threshold last week. These drops failed to perk up buying appetite.

Buyers foresee notable price cuts from Middle Eastern PE producers soon as prices continued to lack buying interest even after pull-backs observed in April. Traders already reduced their offers during the past weeks to boost their sales, while transactions remained scarce. “We heard that a Saudi Arabian major may return with triple-digit declines for PE,” a couple of buyers said.

Some players expect offers from the region to hit much below the $1900/ton CIF Turkey threshold for LDPE. Buy ideas were expressed at $1400-1450/ton for HDPE film and $1450-1500/ton for LLDPE C4 film, all CIF Turkey, subject to 6.5% duty, cash by a few buyers.

Weak projections are underpinned by global signals

Apart from Turkey, players report slowing demand in China, Southeast Asia, India, South America, Egypt and Africa.

Competitive PP and PE offers from China weighed on Southeast Asian markets, while the record-high infections in India cast a pall on the market. Plus, competitively-priced local materials amid high stocks and weak Dalian futures kept demand for imports stalled and led to additional drops in China’s import polyolefin markets this week.

European markets are still deemed firm for the time being owing to the prolonged plant hiccups. Sellers may try to preserve their high margins depending on the outcome of May olefin contracts. Nevertheless, buyers have started to resist historic highs and the peak may be near in the region. Juicy netbacks attracted more import cargos to the region particularly for HDPE, which may start to bring balance to the market in the coming term.
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