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Türkiye’s PP, PE markets face uncertainties following holidays

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 07/07/2023 (02:10)
Turkish polyolefin players have returned from a long break, trying to observe local and global dynamics for cues regarding post-Eid pricing. Deals have been scarce so far amid a blurry outlook between small fluctuations in most outlets and mild downstream demand at home. Moreover, pending announcements from regular suppliers kept players on the sidelines in most cases.

A two-tier market develops for PP

Fresh July offers did not surface until mid-week, as most PP sellers needed time to set their new prices amid the lingering holiday mood in the Middle East and Egypt. Buyers, in the meantime, opted to hold a waiting stance to observe global indications before making any inquiries, let alone limited orders from end users.

Saudi Arabian producers quit aggressive policy

Saudi Arabian suppliers somehow did not seem in a hurry to announce their offers amid the pending details about allocations to Türkiye. Some buyers commented that traders lacked guidelines from their supply sources for most of the week, either due to the ongoing holiday lethargy or the blurry outlook in China’s import markets.

According to players, Saudi sellers were unwilling to compromise further after adopting an aggressive policy to melt their piling stocks back in the second quarter of the year.

A source from a Saudi Arabian producer confirmed, “We lifted our list prices for homo-PP grades following the holiday. Nonetheless, buy ideas remain well below our targets.” Toward the end of this week, another Saudi Arabian producer reported concluding PP raffia deals with rollovers at $900-920/ton CIF Türkiye, subject to 6.5% customs duty.

Similarly, a global trader reported testing slightly higher South Korean PPH prices after achieving satisfactory sales at lower prices right before the long break. Some other traders claimed, “Indian prices below the $900/ton CIF mark have disappeared following the holiday.”

Still, mediocre demand from Europe weighs on other origins

Meanwhile, European and Egyptian sources have applied monthly decreases to Türkiye for July in tandem with falling propylene contracts in the first one. Furthermore, the recession took its toll on derivative consumption in Europe. This led to reduced resin demand, both for local material and export volumes from Egypt and the Middle East across the bloc.

“We do not expect a solid recovery in Europe until September at the earliest, given the nearing summer holidays. In fact, regional polyolefin producers have been trying to mitigate the impact of demand destruction by lowering their run rates,” opined a Turkish player.

CIF Türkiye – Import Prices– PP Raffia – PP Fibre – HDPE

PE sellers focus on bids from buyers

A lack of official announcements from regular suppliers left the PE market in limbo following the holiday, with most sellers trying to collect bids from their customers rather than sharing their list prices. Concerns over end demand coupled with a lack of purchasing power on the part of converters remained the main culprit behind the bearish sentiment.

LDPE dealt at par with an average import price in China

Although most Middle Eastern PE offers had yet to surface at the time of press, an LDPE film deal was confirmed at $900/ton CIF Türkiye, subject to 6.5% duty for July.

“LDPE may settle at around $900-920/ton this month, meaning Türkiye lacks a premium over China’s import market. Poor netbacks should normally deter sellers, but we are not sure whether they can find alternative outlets to direct their cargos amid the prevailing conditions across the board,” a converter commented.

Eyes to stay on global markets, costs

Evaporating premium over China’s import PE markets, where prices seemed to have failed to sustain their late-June gains, may continue to keep players on their toes. “We heard that a Saudi Arabian major planned to seek rollovers for July. Yet, we expect suppliers to reveal price cuts due to volatile Asian markets and a lack of production hiccups in the Middle East,” a trader noted.

“Middle Eastern suppliers may consider conducting turnarounds in the coming days, blaming their poor margins and uncertain demand, let alone the impact of fresh capacities from China and the recession in Europe on a global scale,” a Turkish manufacturer said.

In the meantime, the sustainability of the recent firming in the Asian ethylene market has been mooted, although regional olefin producers maintain their rate cuts to balance the gloomy demand outlook. Players will continue to keep a close eye on upstream markets in the days to come.
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