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Türkiye’s import PVC market turns up driven by surging freight rates

by Merve Madakbaşı -
  • 31/05/2024 (02:43)
Climbing freight rates coupled with an upbeat in Asian resin markets caused PVC sellers to lift their sell ideas in Türkiye, leading to a limited number of official import prices this week. However, a persistent lack of support from downstream demand has kept buyers’ response thin for now, with a tug-of-war on the near horizon between low netbacks and the nearing holiday lull in Türkiye.

Import Prices – PVC K67 – CIF Türkiye

PVC snaps a 3-month bear run in May

Import K67 prices stabilized after hitting their lowest levels since the beginning of 2024 in the second half of May. The prompt market continued to see competitively priced materials due to the lingering liquidity issues. However, the news that container shipping costs from Asia turned up, driven by the escalating trade tension between China and the US, helped the import market snap a 3-month downtrend.

This week, European and US offers rebounded from 4-month lows. South Korean offers were few and far between, rising visibly in response to swiftly higher freight rates from the region.

Buying sentiment unfazed by spiking freights

Bolstering the sentiment on the sellers’ side were also June price hikes in the Asian PVC outlets. The uprun was pioneered by improved buying appetite in India prior to the monsoon rains and higher prices from a Taiwanese major to the region that came earlier in May.

In the meantime, initial price indications from Europe received a lukewarm response from converters. Having secured their previous cargos at around $800/ton CIF Türkiye, consumers seemed unwilling to accept fresh offers at around $850/ton right away.

“We started to test the market with about $30-50/ton increases for June. We expect PVC buyers to digest the latest offers, considering the bulls in Asia and sharply higher freight rates,” a regional supplier said. According to early projections, a Taiwanese major may issue another price hike for July so long as transportation costs remain high and container issues persist.

The dutiable PVC K67 range was assessed $60/ton higher on CIF Türkiye basis, as ex-USG offers reached as high as $800/ton, according to some players. A global trader commented, “Sellers may prefer to direct their US cargos to India if activity stays muted and netbacks remain unfavorable in Türkiye over the near term.”

According to the weekly average data, dutiable import K67 prices on CIF Türkiye basis have been trading at par with or even below import offers in China/Southeast Asia since April this year.

Main culprit: Muted domestic end markets

Some suppliers admitted seeing thin demand toward fresh offers, attributing this to the nearing Eid al-Adha holiday and slow pipe and profile industries inside. Buyers confirmed, “There are still competitive local PVC prices from distributors as low consumption following early May deals and liquidity issues loom over the market. Derivative demand remains in the doldrums given high interest rates.”

Eyes locked on post-holiday demand

Manufacturers have been running their factories at reduced rates of about 50-60% over the last few months, blaming a lack of healthy orders from domestic downstream segments. “We plan to suspend production during holidays for a few days as demand from export markets is not brisk either,” converters reported, while resin demand may pick up once companies return from the break.

A tug-of-war between buyers and suppliers seems highly likely in June, with the recently higher crude oil futures and firming Asia on one hand, and the impact of the materials on the way on the other hand.

“We think American PVC prices in Türkiye will likely post additional gains looking at current highs in Asia’s import market, while K67 should stand at the mid-$800s/ton. As for European origins, PVC producers have been grappling with poor margins and they will be willing to lift the market more if demand allows,” multiple players said. In the meantime, the imminent outcomes of AD probes by India and the EU will be leading to uncertainties about the future trade flows.
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