Unpromising demand casts a pall on PP, PE and PVC projections in Türkiye

Since last week, polymer markets have experienced noticeably weak buying interest. Most buyers have secured only their limited resin needs and then retreated to the sidelines. The primary reason for this reduced demand, compared to June, is a lack of vivid downstream orders. Additionally, suppliers are not optimistic about the demand outlook for August.

PP: Sellers encounter resistance to further price hike attempts

Import PP prices have been moving sideways over the last couple of weeks, following successive hikes fueled by limited availability from May to July. Offers have stabilized at nearly year-to-date highs amid waning buying appetite and still long lead times from Saudi Arabia, the top supplier of PPH and PP copolymer to Türkiye.

An increasing number of sellers have voiced concerns about the demand trajectory for August, citing the imminent summer break in Europe, an important export market for Turkish PP converters. A source from a Saudi Arabian producer commented, “Although PP stocks are still not high and long transit times remain unchanged, the market has not absorbed any further hikes. This is due to ongoing macroeconomic issues, which continue to dampen resin trading and result in thin derivative orders. We do not expect a recovery in demand until September.”

A few players do not rule out the possibility of slight discounts for PP unless activity picks up. CIF cargos failed to provide a competitive edge against local materials, which may keep buying appetite thin for new shipments, let alone lower run rates of about 50% on the side of manufacturers.

They also point to stable to lower prices in Asia, where abundant supply and low downstream run rates are weighing on the outlook despite extreme container prices and congested ports in the region. Netback calculations suggest that Saudi Arabian PPH prices in Türkiye carry a premium of $245/ton over China’s import market, supporting projections of slight discounts in case of firm bids.

Yet, some others expect no price concessions, pointing to the prolonged Red Sea crisis and slightly firmer expectations about the next propylene contract in Europe. Limited supply and slow demand will hold the market flat, as they put it.

PE: Price cuts in Asia rub off on sentiment in Türkiye

The uptrend in China and Southeast Asia wavered in early July, led by softening HDPE film prices as sellers succumbed to adequate supply and poor buying interest. Overall, the off-season, combined with rising supply at the end of a turnaround season, further pressured sellers into H2 July. LLDPE and HDPE film grades continued to trend lower this week, with LDPE also easing from a 2-year high.

As a spillover impact of the price corrections in Asian PE markets, players in Türkiye started to express their early August expectations on a stable note. Multiple buyers said, "End-product demand has been subdued since the end of the Eid al-Adha holiday in June. Most purchases were driven by fear of rising ocean container prices rather than an improvement in end-user demand. Low FX rates continue to hammer our exports, and the approaching summer holidays in Europe are also affecting business." On the other hand, Türkiye’s premium over Middle Eastern prices in China stands at $85-115/ton. Although the gap widened compared to June, it remains more modest than for PP and may lead to rollovers from global suppliers.

A global trader opined, "Polyolefin markets may move sideways next month as activity will stay muted. However, elevated shipping costs and firmer post-holiday signals from Europe will put a floor under CIF Türkiye prices." Some manufacturers voiced their expectations for downward corrections at the high end of the market if import prices in Asia continue their downtrend.

PVC: Market fails to digest hikes as poor end-user demand weighs

The market has been grappling with demand destruction for a while now, as the reconstruction projects in the earthquake zone have been proceeding only in stages, and high interest rates have significantly dampened consumption of derivatives. In industry news, house sales decreased year-on-year in June, marking the fourth consecutive month of decline, according to data from Turkstat.

Spiking freight rates from Far East Asia and a bull run in the key Indian market helped PVC prices rise in late May. Although suppliers applied price hikes for the second month in a row in July, citing their low margins and logistic issues worldwide, these attempts were resisted by converters. The impact of Hurricane Beryl on the market was limited, with Formosa US projected to resume production at the end of this week and Shintech already resuming operations.

Import K67 prices for both European and American volumes were trimmed due to stiff resistance to fresh highs. This week, the market has returned to early April levels, according to weekly average data from ChemOrbis.

Demand will continue to drag on PVC until the Central Bank starts lowering interest rates, according to several players. Adding to the pressure on sellers are fluctuating crude oil futures, waning PVC demand from the key Indian market, falling Chinese prices and reports of players finding relatively more workable container prices in some cases. Although some Turkish buyers voiced their early August expectations on a softer note, already low margins may keep prices close to their prevailing levels.