Turkish PP prices may stabilise following Europe C3 rollover

Matt Tudball

01-Oct-2014

Focus article by Matt Tudball

stableLONDON (ICIS)–Prices for shipped cargoes of polypropylene (PP) from the Middle East could have bottomed out following a rollover of the European October feedstock propylene contract, sources said on Wednesday.

Buyers in the Turkish market are increasingly using the European contract price as a reference when negotiating prices with Middle Eastern suppliers, successfully using the €50/tonne drop in the September contract as one form of leverage to get lower same-month prices PP prices from suppliers.

However, with the rollover in the October price, the bearish run of both raffia and fibre prices seen in Turkey in September could come to an end, some in the market believe.

“My idea is we are at the bottom. Ethylene and propylene are at the low level in Europe,” a Turkish trader said.

There were still lower offers for raffia heard in the market at the end of last week, though it is not clear if deals are being done at those levels.

“Offers for Middle East material by desperate traders weakened further to $1,500-1,510/tonne cost and freight (CFR) Turkey versus no tangible firm bid,” a trader said at the end of last week.

With such low offers being made by traders, Middle Eastern producers are now stepping away from the Turkish market as they see current price levels as unworkable.

“We are not in market from Saudi Arabia, just from Europe,” a producer said.

“Europe works better for us,” the producer added, referring to the favourable exchange rate it benefits from when sending euro priced material from plants in the EU into Turkey, where buyers purchase in US dollars.

“We expect now European prices will stabilise so the opportunity [to sell from the Middle East into Turley] will be there in November,” the producer said.

However, continuing weak demand and lower price offers heard on Wednesday for trucked cargoes from Iran could add further pressure to Middle Eastern producers’ prices, especially for raffia grade PP.

“For the Turkey market… because of Syria and Iraq problems PP raffia and fibre [prices are] still decreasing and raffia with Iranian origin is about $1,480-1,495/tonne carriage paid to (CPT) Turkey, and fibre with Iranian origin about $1,540/tonne CPT Turkey,” a trader of Iranian material said.

Trading activity in Turkey is likely to be limited by the Bayram holiday, which starts on Friday 3 October and last until Wednesday 8 October, though buyers may take time to return to the market because of the current soft demand levels.

Whether or not demand will see a noticeable improvement after the holiday remains open to question, especially as the Turkish lira has started to weaken significantly against the US dollar, which could have a negative impact on buyers’ purchasing activities.

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?