Turkey PE, PP prices slide as buyers shun offers

25 April 2013 10:23  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) prices in Turkey are sliding further this week as buyers stand back and shun ever-decreasing offers from several sources eager to sell, sources said on Thursday.

Offers from Europe, Iran, India, Saudi Arabia and imminently South Korea, whose 6.5% PP and PE import duties into Turkey will be cut or reduced on 1 May, are leading to a standoff with only minimal buying, and then only at levels formerly considered too low.

“I was offered HDPE [high-density PE] from Europe at €1,000/tonne ($1,299/tonne) FOB [free on board] ARA [Amsterdam-Rotterdam-Antwerp] but I can’t take it,” said a trader.

A buyer said it had bought HDPE film at this level CFR (cost and freight) Turkey, but this could not be confirmed. Prices were in the mid-to-high $1,500s/tonne CFR at the beginning of March for product subject to 6.5% duty.

Levels below $1,400/tonne CFR for PP homopolymer, which were considered unthinkable last week, were now being offered from Iran. This number also remains unconfirmed from the sell side but widespread talk of offers at this level has put a further brake on activity.

“This is not the price in the market,” said one importing producer who was offering PP at $1,430-1,440/tonne CFR, “but it is having an effect on sentiment.”

A trader agreed: “This is not a normal market price,” it said. “Volumes from Iran are minimal in PP.”

Meanwhile, sources wait for new offers from Saudi Arabia. Earlier in the month PP had been offered at $1,490-1,510/tonne CFR, subject to a 6.5% import duty. New offers from Europe at €1,160-1,180/tonne CFR are having an impact as these levels, equating to $1,506-1,532/tonne, are not subject to duty and therefore very competitive.

In early March, PP was trading in the high $1,500s/tonne CFR for product subject to 6.5% duty.

Low density polyethylene (LDPE) prices are also suffering the impact from European offers. Last week sources said LDPE from Europe was at €1,150-1,180/tonne CFR, while this week levels above €1,150/tonne CFR are not considered workable. This equates to $1,495/tonne, but is not subject to duty.

LDPE from one source in the Middle East is said to be at $1,400/tonne CFR. Iranian LDPE cannot work at these levels as it is now subject to a duty amounting to 13.5%, including the extra 7% duty imposed on it in October 2012.

Not all European suppliers are offering to Turkey at these levels by any means but the offers that are being made are enough to affect sentiment.

Another element that is disturbing the status quo is the imminent lifting of duty of some South Korean PE and PP grades following a free trade agreement signed on 1 August 2012.

Customs duties on linear low density polyethylene (LLDPE), high density polyethylene (HDPE) and PP copolymer imports will be eliminated between Turkey and South Korea. They are currently at 6.5%.

Duties on low density polyethylene (LDPE), PP homopolymer and polyvinyl chloride (PVC) will be gradually cut from the current 6.5% duty for the next six years.

Sources say that polymer is building in readiness for the lifting of these tariffs next week, but it is not clear how much or which grade of material will be offered.

“As usual these reports are exaggerated,” said another trader, “but there is enough product around without this too.”

“Most buyers are just not buying, whatever the price,” he added.

Some sources felt that the PP market at least could rally once demand improved.

“There isn’t that much material around. Inventories are not that high. Buyers could get a shock when they come back,” said one of the traders.

For the moment, though, availability is ample and buyers avoid building any stock.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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