Upwards momentum for PE lags behind PP in Turkey

In Turkey, PP prices are rising at a faster pace compared to PE products based on a number of factors, although both products followed a bullish trend since mid-December. PP supplies from the Middle East, Egypt and Iran are considered short. Plus, demand for raffia picked up this week following a period of sluggish trade which reinforced the bullish trend for PP. The recently announced hikes generally passed on February done deals as PP buyers who were counting on their existing stocks for some time had to return to the market to stock up.

Limited supplies from the Middle East, which is among the main PP and PE suppliers of Turkey, bolstered steep increases in both markets. A manufacturer reported, “A Middle Eastern producer had very limited PE material and delayed our shipments from January to mid-February. As for PP, meanwhile, replenishing activities had almost grinded to a halt on part of buyers during December although sellers were insistent to sell, while the case reversed in the recent weeks. In addition to already tight fibre and injection, raffia supply has tightened too. We expect polyolefin prices to remain strong in March, but the market might change direction in April.”

A distributor stated, “We were able to sell Turkmenian PP raffia with $50/ton increases compared to last week. Meanwhile, demand is rather weak in the PE market as buyers are not rushing to buy despite the firming prices. Although major Middle Eastern sources as well as the domestic producer, Petkim lifted their prices for both PP and PE for February, PP followed a stronger trend.”

“Demand is there for PP, but there is not much available material. Sellers might be holding onto their cargoes. However, the increases for PE have been more moderate than PP. This might be stemming from the fact that PP transactions are mostly concluded on a cash basis while PE is traded on a deferred payment basis which hampers activity, particularly for LDPE. Another reason is plentiful PE supplies from Iran, unlike for PP, we can say,” another seller opined.

Similarly, a trader stated, “PP supply is tighter from Iran these days. Moreover, there are concerns about transportation disruptions from the country to Turkey for next month due to the upcoming Newroz holidays in Iran. Also, there is lack of Egyptian PP raffia recently. ”

On top of that, insurance companies moved aside after the credit rating agency Fitch’s decision to downgrade the country to junk status, reminded an agent of a PP, PE producer. “This caused some polymer producers to limit their volumes to Turkey due to its risky country status. PE was affected more than PP. Moreover, plentiful Iranian PE supply in Turkey may weigh down on the market soon,” he argued.

Another player expressed, “Both PP and PE prices are rising, but PE lags behind PP as supply-demand dynamics keep PP hikes larger and resistance to PE increases stiffer, which is the case in other markets including China and Europe. We are firm on our current levels as we have firmer expectations for March. Freight rates from Iran have doubled and transportation issues due to Newroz holidays might deepen the tightness.”