FocusTurkish PE PP demand slow, offer volume increases

18 March 2013 11:49  [Source: ICIS news]

Istanbul, TurkeyLONDON (ICIS)--Polyethylene (PE) demand in Turkey is low, at a time when the volume of offers from various regions has increased and global demand has taken a hit, sources said on Monday.

“The market is asleep,” said one trader. “People aren’t buying because they expect prices to fall.”

“In the past few days offers have gone down drastically,” said another.

Material from Europe is now being offered into Turkey, as a result of flat demand elsewhere in the region. Low density polyethylene (LDPE) and polypropylene (PP) offers have been heard.

PP offers from Europe are said to be around €1,200/tonne ($1,558/tonne) CFR, while LDPE is talked at €1,260-1,270/tonne CFR. European product is not subject to duty, so is higher than many offers from dutiable areas on a CFR basis. No European producer has confirmed selling at such numbers but buyers in Turkey say they have bought PP in particular.

High density polyethylene (HPDE) is still offered from Saudi Arabia at $1,600/tonne CFR, subject to 6.5% duty, but sources question how much product is behind these offers and stress that such prices, confirmed by buyers at the end of February, are no longer workable.

Buyers’ price ideas for Iranian HDPE are now at $1,500/tonne CFR and sometimes below, and little business is reported to have been done. Holidays and truck availability issues have also led to a slowdown of this business, on top of the hesitation from the market in general.

Turkish buyers keep a close eye on price movements in Asia, and Iranian HDPE cargoes were offered last week barely above $1,300/tonne CFR in some cases. The difference between freight and the availability of transport makes a big price difference inevitable, but nevertheless Turkish buyers expect levels to erode.

“Nobody is buying at $1,510/tonne CFR let alone $1,600/tonne [CFR],” said one of the traders.

“I was offered some HDPE at $1,430/tonne FOB from Asia. Have I bought? No,” said another.

“In the end, though, they are running their factories, they will have to buy,” it added.

The local Turkish producer also dropped its prices last week, by up to $25/tonne.

The hesitation in the Turkish market is mirrored in the European PE and PP markets, where buying is minimal and sources wait for lower prices in April.

Expectations of lower offers are based on lower naphtha prices. On Monday morning naphtha was assessed at $904-912/tonne CIF (cost insurance freight) NWE (northwest Europe). The average for March is looking lower than the average for February, leading to expectations of a drop in the European ethylene and propylene contracts when they settle for April.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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