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Türkiye’s PP market continues to grapple with tight supply, prices at multi-month highs

by Merve Madakbaşı -
  • 09/02/2024 (09:06)
Polymer players have been tackling a supply crunch since late 2023 due to the Red Sea unrest, while the prolonged logistic hurdles remained the main driver of new price hikes in February. PP has taken the hardest hit from disruptions to the global supply chain, as Türkiye depends on import suppliers for this product to a large extent.

According to the weekly average data from ChemOrbis, prices from Saudi Arabia, by far the largest homo-PP and PP copolymer supplier of Türkiye, have climbed by 25-27% ($240-270/ton) in total since the bullish trend kicked off eight weeks ago.

Raffia - Import PP Prices – CIF Türkiye - Fibre
Tightness spurs panic, import PPH prices soar to an 18-month high

PP prices in Türkiye turned up in H2 December, when the Suez disruption first broke out and wreaked havoc on the market. Most traders and consumers were caught with low year-end stocks, while the bull run gained further momentum in January as delivery delays and longer transit times amid the rerouting of several cargos had knock-on effects on both manufacturing and resin prices.

According to the weekly average data from ChemOrbis, Saudi Arabian PPH offers have hit their highest levels since July 2022. Multiple players agreed, “If derivative demand was robust, the market would even see steeper increases in Q1.”
Rapid increases necessarily called the 2021 peak to mind, as prices in Türkiye had witnessed meteoric hikes at the time. An acute shortness of import supply amid elevated shipping costs and a pent-up demand following the Covid curbs had pushed PPH prices to unprecedented highs of $1900-2000/ton CIF depending on the grade before a steep downturn emerged.

Acute supply issues hit PP fibre more than raffia

Limited allocations from regular Saudi Arabian, Egyptian and Russian suppliers reinforced the tightness as of mid-Q1. Players in the south regions confirmed facing a severe shortage of PP fibre given modest import volumes and delivery delays, with one of them saying, “Some slated shutdowns at certain Saudi Arabian producers exacerbated the problem further.” This is also because the local producer, Petkim, mostly provides PP raffia, injection and non-woven grades rather than fibre.

ChemOrbis data also mirrors the tighter scene for fibre, as the cumulative increases for this product surpassed those of raffia. Import Saudi Arabian fibre offers started to be confirmed at or close to $1250/ton CIF toward the end of this week, with buyers confirming, “The previous levels of $1220/ton faded away as these limited volumes were quickly sold.”

No quick relief seems on horizon

Although freight rates started to signal a stabilization and shipping costs leveled off in response to the holiday lethargy in trade across Asia, Turkish players will continue to struggle with availability issues for a while more.

A textile manufacturer said, “We have not realized an uptick in derivative demand from export markets despite earlier hopes for a revival of buying interest from European end users amid the global supply chain crisis. Still, tight supply continues to give a hard time to Turkish converters as lead times from the Middle East have been extended to as long as 60-70 days in some cases.”

Although several consumers reported elusive end-product demand at home and abroad, tight PP availability is expected to take center stage for a while more. It remains to be seen to what extent PP buyers will manage to pass their visibly rising resin costs onto their customers in the coming term. Still, the crunch may remain intact into March or even April.

Türkiye’s premium over China grows further

Meanwhile, the growing gap with China’s import PP market will continue to keep players on their toes. Türkiye’s premium over Middle Eastern prices in China has reached $285/ton, the largest delta since May 2022. This was not only because of freight differentials but also due to a steady trend in the latter one amid muted pre-holiday demand for import cargos.

A Turkish player said, “Logistic mishaps seem to have prevented material flow from Chinese PP producers to Türkiye despite the opening of the arbitrage window. A lack of material may continue to keep the market strong into late Q1 whereas we may see some price corrections once the delayed cargos start to arrive gradually. The market will try to find a direction with supply snarls and higher costs on one hand and the nearing elections and the holy month of Ramadan on the other.”
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