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Turkish players question future outlook as import PP, PE prices see 6-month highs

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 07/02/2020 (09:16)
PP and PE markets have witnessed steady hikes since they bottomed out in H2 December after a two-month downtrend in Turkey. Now that the tightness-driven gains have sent prices to their highest levels since July-August 2019, players are questioning whether or not the rally would be sustained in the coming term.

Import PPH prices climbed 7-9% since 2020 kicked off

Homo-PP raffia and fibre prices have been up by around %7 ($71/ton) and 8% ($98/ton), respectively since the beginning of this year. Supply was reduced in sync with scheduled or unplanned cutbacks following producers’ stock clearing in H1 December. This also buoyed demand from converters who welcomed the new year with minimum inventories.

Turkey’s premium over China grew to a 2-year high for PP

According to the weekly average data from ChemOrbis Price Index, import PP raffia and fibre prices in Turkey have reached their highest levels in 6 months this week. Besides, their premium over China has grown to around $135/ton.




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

This is due to the fact that prices extended their gains into February on the heels of an intensifying tightness. On the contrary, China’s PP market returned from the extended New Year holiday on a weak note. The coronavirus-hit trade in polymer markets, mounting domestic stocks and volatile Dalian Commodity Exchange (DCE) all weighed on PP sentiment.

Mid-East PE sources blamed lack of allocation for seeking refreshed hikes

This month, the bullish run for PE was reinforced by turnarounds that were slated for January-February. Not only the fading stock pressure on the side of US suppliers but also supply cutbacks in the Middle East tempted sellers to apply increases for the second straight month.

According to ChemOrbis data, import LLDPE and HDPE film offers in Turkey have soared by almost 8-10% ($72-95/ton) since 2020 started. LDPE prices have also gained about 5% in the period. The PE market is now standing at its highest level in 6-7 months, the weekly average data from ChemOrbis suggest. Import PE prices are carrying a premium of $55-65/ton over China, as a side note.



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

Prompt volumes remain tight for LLDPE

LLDPE supplies have been limited since last month. A few buyers also confirmed supply constraints for LDPE general purpose grade. Players marked, “The deliveries of previously purchased US cargos were delayed, somehow. This keeps LLDPE availability limited, in particular.”

Future trend under discussion amid weak signals from China

By all means, Turkish players are curious as to whether polyolefins will preserve their strength, with low supplies on one hand and China’s gloomy outlook on the other hand.

Needless to say, the weaker scene in China has cast a cloud on expectations for additional price hikes in Turkey. Despite some opinions that the spreading virus may boost demand for medical-use polymers , the sentiment signals further weakness in China on a bunch of factors.

Trading activity is yet to fully resume in China as companies have asked their employees to work from home in an attempt to contain the spread of the virus. Moreover, Chinaplas 2020 was postponed. Players believe that the impact of the outbreak on the market will come to the light by the end of Q1.

China faced high domestic polyolefin stocks of over 1 million tons in the first week after holiday on the top of the upcoming new capacities in the country. Muted PP and PE demand as well as dipping energy prices appear to be the other factors that weighed on the market.

Under these circumstances, Turkish buyers believe that the bullish trend may halt in the coming term, claiming that the prevailing market levels are overrated. “Activity calmed down as demand was boosted by supply constraints but not a spectacular end demand,” they note. A packager commented, “PP prices may be weighed by the growing premium of Turkey over China.”

Yet, traders project that tightness may not find a relief until April, which will hold the market at or close to the current levels if not pushing them further up. A lack of Egyptian supply on the top of limited volumes from Saudi Arabia and Russia may continue to dominate the PP market. Uzbek and Iranian PE sources have not been that active in addition to already limited availability from the Middle East, they add.
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