Türkiye PP, PE outlook for 2025: Q1 set for a firm footing, eyes on derivatives for a whole year

Polyolefin markets have struggled to see significant price increases this year, apart from the first quarter, which was buoyed by a surge in freight rates driven by Middle East tensions and active derivatives demand. From the second quarter onward, prices lacked strong momentum due to waning demand for end products that fell short of seasonal expectations amid economic challenges. The second half of 2024 started under the influence of declining freight rates. However, a recent recovery in shipping costs has not prevented the typical year-end slowdown in Türkiye.

Although markets traditionally wind down with declines at this time of the year, the downward trend has moderated. Expectations for January already point to a potential shift in prices. PP suppliers have begun adopting a slightly firmer stance, with PE likely to follow soon. Nevertheless, a substantial wave of increases is unlikely in early 2025 due to several limiting factors.

Key takeaways from 2024

It has been another challenging year for polyolefin sellers and buyers, who struggled to manage inventories amid persistently cautious demand in domestic and major export markets, including Europe and Asia.

In 2024, PP and PE markets often required specific supportive events or crises to recover. Narrowing margins and the high cost of capital remained key challenges throughout the year.

Turkish manufacturers faced multiple hurdles, including high utility costs, unfavorable exchange rates, and restricted access to finance. In particular, difficulties in securing low-interest loans for working capital complicated production planning. Disruptions in global supply chains during H1 2024, driven by the Red Sea crisis and rising raw material costs, further eroded the competitiveness of converters. Many resorted to operating at reduced production rates due to unprofitable sales of finished goods. Meanwhile, Turkish exporters grappled with fierce competition in global markets, exacerbated by recession fears, as they worked to maintain their market positions.

Unsatisfactory netbacks challenge sellers, especially for PE

PP and PE producers frequently expressed dissatisfaction with unfavorable netbacks in Türkiye’s import markets throughout 2024. However, new capacities in China and Southeast Asia, combined with underwhelming economic recoveries in major economies, compelled them to continue supplying raw materials to the country.

According to ChemOrbis weekly average data, Saudi Arabian PPH prices in Türkiye traded more than $200/ton above import prices on a CFR China basis for most of the year. This premium stemmed from elevated freight rates caused by logistical disruptions linked to Middle East tensions and Türkiye’s heavy reliance on imports.

Middle Eastern import PE prices on a CIF Türkiye basis maintained a premium of $100-150/ton over China during the first nine months but dipped below China’s market for LDPE in Q4. By year-end, the gap narrowed to $50-70/ton for LLDPE and HDPE film. This narrowing was driven by subdued demand, declining shipping costs, and growing stock pressure on sellers, partly due to an influx of American LLDPE and HDPE cargoes. For LDPE, a weaker €/USD parity led to competitive European offers, intensifying pressure on Petkim amid the producer’s accumulating stocks and sluggish exports.

Given persistently poor margins in Türkiye, some Middle Eastern PE producers chose to skip offers to the country in the past couple of months. Conversely, Saudi Arabian PPH suppliers ramped up exports to Türkiye, enabling them to clear inventories ahead of the new year.



HDPE shows weakest performance due to lengthier supply

By mid-2024, certain HDPE grades and derivatives faced intensified pressure from a growing supply of Iranian compounds. Import HDPE film, which carried a slight premium over LLDPE C4 film early in the year, traded below it throughout the second half of 2024 due to ample supply.

In late October, Türkiye imposed additional financial obligations on various plastic compounds imported from non-WTO countries, excluding Azerbaijan. This boosted sentiment for HDPE, with players expecting reduced availability to support the market by the new year. Harsh winter conditions further curtailed deliveries from Uzbekistan, adding to the improved outlook.

Thin end-user consumption disrupts seasonal demand patterns

The war in the Middle East disrupted commercial shipping routes in early 2024, increasing logistic costs and supporting polyolefin markets. However, in the second half, global oversupply and weak end-product consumption dominated global markets, leading to the closure or shutdown of several facilities in Europe and Asia due to the broader economic slowdown.

Meanwhile, logistical challenges in Türkiye eased during this period while declining consumption disappointed converters even during peak seasons, prompting reduced capacities at downstream units. According to the Central Bank of Türkiye (TCMB), the manufacturing sector’s capacity utilization rate hit a 1.5-year low in September. Disrupted cash flow and a contraction in the textile sector occasionally halted raw material purchases, with some companies, unfortunately, filing for bankruptcy. Persistently high inflation pushed expectations for easing monetary policy into 2025.

What awaits the polyolefin markets in 2025?

A gradual recovery is expected in 2025, but several factors could limit price increases. Market players were curious whether late 2024’s declines were driven by global oversupply or weak consumption. As for the medium-to-long term, the key questions appear to be when domestic consumption in Türkiye will improve and when broader economic conditions will stabilize. Still, the near-term outlook calls for PP and PE hikes amid diminishing prompt supply, with HDPE film particularly signaling a firmer sentiment on tighter supply.

Q1 calls for a rebound, but to what extent?

Polyolefin markets will enter the new year on a stronger footing. Import PP prices have already witnessed modest increases, with workability remaining under discussion, while PE offers have hit the bottom. Sellers relieved stock pressure following successful sales at Plast Eurasia Istanbul 2024, with Saudi Arabian producers even clearing December PP stocks by November.

Aggressive European and American PE offers that added pressure last month have subsided ahead of the Christmas holiday. Despite weak oil markets, petrochemical producers aim for price increases to recoup margin losses. However, the arrival of import PP and PE cargos secured in November and December will cap price momentum in Q1 2025.

No quick economic recovery in sight, hopes pinned on 2026

The Turkish economy has encountered notable difficulties in recent years, with growth decelerating more than anticipated in the second quarter of 2024. Data from the Turkish Statistical Institute (TurkStat) indicates that the economy grew by 2.5% during this period, missing the 3.2% growth forecast in a Reuters poll. This slowdown highlights the effects of a year-long monetary tightening campaign designed to control inflation and stabilize the economy. Macroeconomic challenges will persist, with significant improvements in end-product demand not expected until 2026.

The government revised its 2025-2027 economic outlook in September to address inflation and slowing growth. Some analysts anticipate cautious inflation control and monetary policy adjustments in 2025, with inflation projected to fall from 55-60% in 2024 to 30-35% in 2025. At the same time, a 250 basis point interest rate cut is anticipated in December, according to Citi analysts. The World Bank financing, which neared $5 billion, is expected to support key development projects, including transportation and agriculture in the medium term.

This is to say, perspectives suggest a cautious yet hopeful outlook for Türkiye’s economy in 2025, with attention on inflation control, interest rate adjustments, and the broader impact of global economic conditions. Some economists indicated that inflation would decrease to approximately 25% by the end of 2025.

In terms of future price trends for PP and PE, market equilibrium will likely result in modest price fluctuations in the coming quarters of 2025, largely dependent on the pace of economic recovery. Upcoming capacity expansions in Asia intensified competition among polyolefin producers, and persistent global economic uncertainty is expected to limit significant price movements. Prices may only see slight adjustments, barring any major supply disruptions, before the typical year-end lull sets in by autumn.

No escape from geopolitical conflicts’ impact on PP, PE

Geopolitical tensions remain a factor that may put energy supply at peril. Although recent conflicts in the Israel-Palestine-Lebanon corridor have calmed down for now, the Russia-Ukraine war is not over. At the same time, lower oil demand projections suggest that futures will remain under pressure into the new year. Concerns over demand from China and potential trade barriers from the US Trump administration against this Asian country, which still copes with real estate turmoil and boosts measures to bolster economic recovery, loom over the trajectory.

In the meantime, reconstruction following Syria’s civil war may boost demand for specific end products in the medium term, potentially increasing resin purchases by Turkish converters. This could mitigate the adverse impact of gloomy domestic consumption to some extent.

Supply pressure to persist, demand balance remains distant

Global polyolefin producers are expected to continue carefully managing surplus in 2025, particularly in response to massive PP capacity additions in China. The ongoing market share battle between Saudi Arabia and the USA in the PE market will impact prices, likely preventing significant increases. China’s emergence as a net exporter of PP may position Türkiye as a key target market, contingent on favorable freight conditions. Producers losing market share in China, which has ramped up domestic capacity, will need to pivot toward Europe and Türkiye for both PP and PE. Consequently, the timing of demand recovery in these regions will be crucial in shaping market dynamics in 2025.

Balancing global supply and demand will take time, which will influence pricing in Türkiye. However, potential delays in commissioning new facilities and Türkiye’s steady import performance in 2024, despite economic challenges, are noteworthy factors to consider.

Cumulative PP imports surpassed 2 million tons in the first 10 months of 2024, while PE volumes reached 1.9 million tons. Once figures for November and December are finalized via ChemOrbis Statistics Wizard, total imports will likely match or exceed the previous year’s levels, despite sluggish consumption and economic headwinds.