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Türkiye’s PE market up in Sept as limited quotas offset muted demand

by Merve Madakbaşı -
  • 11/09/2023 (10:20)
PE suppliers started to seek monthly PE increases over the past week, relying on limited allocations from the Middle East. Climbing crude oil prices driven by extended output cuts from Saudi Arabia and Russia also underpinned sellers’ hike requests. Yet, subdued buying interest capped more significant hikes.

LDPE sees more notable gains than LLDPE, HDPE

Middle Eastern prices were assessed $40/ton higher for LDPE at $1050-1070/ton CIF Türkiye, subject to 6.5% duty, cash last week. LLDPE C4 film and HDPE film markets were assessed $10/ton higher, both at $1020-1040/ton with the same terms. More visible gains in LDPE were attributed to limited allocations from the region.

On the other hand, players had no supply concerns over LLDPE and HDPE film grades owing to regular allocations from Saudi Arabia and Qatar, let alone the return of an Omani producer after skipping offers to Türkiye in the previous two months.

Larger LDPE hikes were also in line with LDPE’s momentum in Asia, where prices were underpinned by seasonal factors over the past few weeks, as well as relatively modest supplies in Europe for the same grade in the post-holiday period. According to the weekly average data from ChemOrbis, Middle Eastern LDPE has regained some premium over LLDPE and HDPE film after trading at par with or even below these products since April this year.

CIF Türkiye – Import Prices – LDPE – LLDPE – HDPE

Market in flux amid surging costs, deep cash constraints

More players are expected to negotiate new price levels this week. Modest price hikes are likely to pass through transactions considering the possibly limited needs of buyers on the one hand and multi-month high energy complex and firm import PE prices in China on the other hand. Financial issues are projected to continue to dampen buying appetite in the coming days, although PE still fares better than PP.

“Soaring ethylene costs, along with 10-month high crude oil prices across the board, paved the way for September hikes. Although buying appetite has not been that encouraging, PE sellers will probably achieve their modest hike targets,” players commented.

Sources from PE producers affirmed that demand was not as strong as it was earlier in Q3, while a lack of stock pressure supported their sales. A source pointed to lower run rates at around 60-70% on the side of converters amid falling consumption as another factor to weigh on resin purchases. According to data released by the Istanbul Chamber of Industry and S&P Global, Türkiye’s Purchasing Managers Index (PMI) for manufacturing stood at 49 in August, down from 49.9 in July.

At the same time, manufacturers underlined financial challenges that put a heavy strain on business. “Limited bank loans are still impeding trading activity, and cash flow issues remain intact,” said a packager.

Buyers: Traders have plentiful stocks on hand

It remains to be seen whether higher import prices will rub off on the local channel or not. Last week, the locally-held PE markets gave limited response to the recent wave of hikes. A manufacturer operating in the southern region opined, “We feel that sellers have some stocks on hand as we have received more calls recently either for prompt or nearing materials.”

What do global indications say?

Climbing costs will apparently keep PE prices firm in the near term, while demand may not revive so long as macroeconomic concerns linger. This projection is also based on Türkiye’s July import data, which hit the highest volume since March this year. The yearly comparison pointed to a gain of around 44%, ChemOrbis Import Statistics data revealed.

Looking at other outlets for a clue, PE markets in China and Southeast Asia were torn between bullish upstream chain and consumers’ resistance to additional hike attempts in early September. Sellers may try to hold onto their firm stance to look out for their margins. Still, whether manufacturers will manage to pass on their higher raw material costs to their end-product customers remains unclear.

The outcome of PLAST Fair, which takes place every three years in Milan, Italy, and gathers global plastics players, will be monitored in the days to come. Turkish players will keep an eye on demand in Europe to see whether triple-digit PE hikes will see acceptance. This is considering some pre-buying activity that took place in the region prior to the long August break.
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