Sliding crude tempers bullish tone in Türkiye’s PP and PE markets, but firm sentiment holds

The outbreak of Israel-Iran clashes in the Middle East swiftly pushed up crude oil and freight rates by mid-June, strengthening sentiment in Türkiye’s polyolefin markets. The withdrawal of offers by sellers last week further reinforced July expectations. However, this week, a retreat in oil prices amid easing geopolitical tensions slightly undermined the hike projections. Nonetheless, sellers maintained a firm stance, as supply concerns persisted, and the fragile sustainability of the recent ceasefire remained under close watch by players in the energy and logistics industries.

Wild swings in oil prices stun polyolefin markets

The US involvement in Middle Eastern conflicts on Sunday put polyolefin markets on edge at the start of the week, amid concerns on Monday that the regional conflict could escalate, and commodities would react to this development. Shortly after, the ceasefire announced on Tuesday calmed the markets’ anxiety and reversed the rally in oil, creating confusion around potential PP and PE pricing for the coming term.

ChemOrbis Price Wizard data showed that NYMEX (WTI) oil futures surged by around 23% from $61/barrel in late May to a peak of $75/barrel during the height of Middle East tensions. However, the market saw a sharp reversal this week, with prices plunging by 12% to $66/barrel following a ceasefire between Iran and Israel. Similarly, ICE Brent Europe futures climbed by 19% from $64/barrel to $76/barrel before retreating by 9% to $69/barrel amid easing geopolitical risks.

Yet, supply dynamics and costs continue to support sentiment

The downward correction clearly impacted the market starting Tuesday morning, causing the bullish momentum to lose some steam. Nonetheless, sellers refrained from rushing to announce their fresh July offers, opting instead to take time to gauge responses from upstream and shipping chains. A global PP and PE seller commented, “We had not reflected the previous spike in oil prices in our prices. So, we are not planning to revise our offers downward. Moreover, the geopolitical developments should be tracked closely, as they remain highly dynamic, and it’s hard to say the tension has entirely passed for now.”

Spot naphtha prices responded to the decline in oil futures, although they managed to stay above the late-May lows. This supported some projections for higher July olefin contracts in Europe, although the expected increase was revised down to €10-20/ton.

On the flip side, China’s polyolefin markets were rather stable this week in response to crude fluctuations. Although some further price gains were seen in the import market, the sustainability was in doubt. Meanwhile, prices in Southeast Asia remained supported by elevated freight rates.

Buyers minimize risks by securing extra volumes earlier

Similar to sellers, PP and PE buyers also adopted a wait-and-see approach this week following their purchases last Friday and this Monday. A market player noted, “Although there was no panic, most buyers made inquiries to procure some volumes for safety purposes, aiming to avoid any risks of disrupted supply in July. As a result, sellers do not seem to be under stock pressure at the moment.”

Although new announcements from polyolefin producers were mostly pending at the time of writing, sporadic PP and PE prices from traders hovered around the upper ends of last week’s range, with lingering expectations for price hikes—albeit in more modest amounts than initially projected. A trader commented, “The bulls faltered to a certain extent, but ongoing supply limitations will probably pave the way for reasonable hike attempts next month. How the ceasefire and buying behavior evolve will ultimately determine the extent to which prices can rise.”

Despite the recent easing of tensions, container shipping delays in the Gulf have reached their highest level this year. Between June 16 and 22, average delays exceeded 10 days—the longest since February, when Houthi attacks in the Red Sea caused widespread congestion across Gulf terminals, according to maritime analytics firm Windward.

A manufacturer said, “We expect sellers to test some price hikes unless container rates decline or PP and PE prices in Asia weaken, widening the price gap with Türkiye. Meanwhile, the approaching summer holidays in Europe, combined with the recent faltering of bullish sentiment across the board, may cap potential gains or lead to rollovers as July progresses. We will also be monitoring the status of Iranian HDPE supply and the recent customs delays affecting LDPE, as any prolonged issues could tighten supply.”