28 August 2013 16:37 [Source: ICIS news]
LONDON (ICIS)--The weakness of the Turkish lira, which reached a new record low on Tuesday against the dollar, is having a detrimental effect on polyethylene (PE) and polypropylene (PP) business in the country, sources said on Wednesday.
On Wednesday afternoon, the Turkish lira was trading at 2.06 against the dollar, from 1.95 on 1 August. A month before that, it had been trading at 1.92. In early April, it had stood at, at 1.81.
Buyers are moving to the sidelines and sales activity is very low in the polyolefins sector.
At the same time, Middle Eastern producers were preparing the market for higher prices. Local producer Petkim also increased its prices by $20/tonne, but buyers were in no position to accept increases.
PE and PP prices are traded mainly in dollars, and the sharp fall in the local currency meant that prices were effectively increasing as buyers were faced with dollar-based transactions.
“Banks are withholding credit and customers are not paying,” said one trader.
Higher crude oil prices were also exerting pressure on costs, as geopolitical tensions affected upstream values.
“Because of all this prices are going up, but demand is terrible” said the trader.
“All payments are being delayed,” said another.
PE and PP business in Turkey has not picked up as many players had expected after recent religious holidays, and the latest plunge in the currency’s value is not supporting activity.
High density polyethylene (HDPE) offers were talked in a wide range, with offers of Iranian HDPE said to have dipped back towards $1,400/tonne CFR (cost and freight) NWE (northwest Europe), but few buyers were ready to buy under such uncertain circumstances.
Some PP offers from Europe, at a report unconfirmed level of €1,250/tonne CFR Turkey, were also said to be inciting little interest among buyers.
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