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Weak dynamics shape Nov outlook in Turkey’s PP, PVC and PE markets

by Merve Madakbaşı -
  • 28/10/2022 (15:16)
Players have voiced their weak expectations as a slew of factors at home and abroad led to signals of lower prices in Turkey’s PP, PVC and PE markets for November. The general outlook has been shaped by an unpromising demand outlook through Q4 as falling consumption amid economic woes outweighed lower resin output.

Spillover impact from global weakness

On top of a gloomy demand outlook throughout Q4, weak trends in China, Southeast Asia, India and Europe have also had an adverse impact on the sentiment in Turkey, not to mention tumbling container fees. Recession fears surrounding global commodity markets coupled with overrated energy costs have dimmed activity across many markets.

Moreover, players do not rule out the possibility of destocking activities from the US and Russian suppliers for PVC and PE going forwards. This would clearly put an added strain on markets, fueling competition between suppliers. “Saudi Arabian PP sellers will eventually face piling stocks so long as demand stays mediocre,” added players.

PP: Under heavy strain of poor derivatives

Players: PPH may near the $1000 CFR Turkey mark

PP prices have been softening since the middle of October for most grades despite planned and unexpected shutdowns in the Middle East and Europe. Fibre grade pioneered the weakening due to persistently tepid demand from downstream markets, particularly carpet and textile industries.

Following suit, PP raffia offers edged down in response to waning demand as compared to September, when buyers had been lured back to the market amid talks of a price bottom coming.

According to the weekly average data from ChemOrbis, import Saudi Arabian PP raffia and fibre prices have eroded by around 2% ($15/ton) and 8% ($90/ton), respectively as compared to the end of September. The steeper loss of fibre reflected slower end-user demand as compared to raffia applications although falling purchasing power and rising utility costs hit demand for both grades.

PVC: Low season adds further to lethargy

Offers on brink of new drops in November

Turkey’s PVC market witnessed a recovery in sentiment back in late summer as reduced import supply coupled with diminishing prompt availability caused sellers to renew their confidence after a long period of dramatic price falls. Nonetheless, the market failed to ride a recovery as ebbing demand came to the fore once again in October.

ChemOrbis data suggested that the duty-free PVC K67 market eroded by $100/ton (10%) through October. The low season and unexpectedly rising volumes from Europe were added to the overall stagnancy stemming from unfavorable economic conditions. Indeed, high caustic demand and prices in the region led to an easing of PVC supply to Turkey. Competitive prices from Egypt weighed on European offers despite inflated energy costs in the region.

Meanwhile, an ongoing absence of Russian suppliers limited drops for dutiable K67 while prices came down by $55/ton (6%) this month. Still, accumulating stocks at US PVC producers and bearish trend sweeping Asian markets had a spillover impact on major outlets, including Turkey.

PE: Sentiment wavers following October gains

Most players do not see rollovers feasible

PE prices turned up in October on the heels of a demand revival and supply cutbacks across the board. Activity fared better than PP in October considering a long period of sluggishness that defied the summer season. Yet, buying interest waned as the month wore on amid looming recession fears around the world.

According to the weekly average data from ChemOrbis, Middle Eastern PE prices gained $45-60/ton (4-5.5%) depending on the grade since late October. Nonetheless, the sentiment has faltered recently with low demand from derivative markets, the year-end lull and the expected return of the local producer, Petkim, coming to the fore.

Some Middle Eastern PE producers intend to approach the market with rollovers while transactions are likely to be concluded with discounts later next month.

Latest updates on local resin production

According to ChemOrbis Production Pro, Petkim plans to resume PP and PVC production by around mid-November, while the company will commence the restart process for PE by the end of October. Multiple players commented, “The easing supply outlook will be a key factor to push prices south next month while CIF cargos may face ebbing demand as the end of 2022 rapidly approaches amid a blurry economic trajectory.”
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