Iran tightness hits Turkish PP/PE market; spot prices increase

Focus article by Chris Barker

LONDON (ICIS)–Turkish polyethylene (PE) and polypropylene (PP) spot prices increased significantly under the influence of supply restrictions from Iran, a generally tight market and feedstock prices rises.

The price of most PE grades increased by $60-130/tonne, putting low density polyethylene (LDPE) of Middle East origin at $1,230-1,250/tonne CFR (cost & freight) Turkey, linear low density polyethylene (LLDPE) of Middle East origin at $1,180-1,230/tonne CFR and Middle Eastern high density polyethylene (HDPE) film at $1,230-1,250/tonne CFR.

In PP, all grades registered increases ranging from $70-150/tonne, putting homopolymer raffia spot prices at $1,230-1,260/tonne CFR Turkey from India and the Middle East and homopolymer fibre spot prices at $1,280-1,300/tonne CFR from India and the Middle East.

Iranian-origin price ranges for PP and PE were also adjusted upwards on a notional basis, although sources say there are generally not many sales of material originating from Iran in Turkey at present.

It is not clear how many firm deals have so far been carried out on the market, but feedback from both sides suggests there has been a clear upward trend in prices.

New Iranian regulations requiring importers to prove the status of imported plastics are said to have severely delayed material from that country and led to numerous shipment cancellations. This has greatly reduced the material available on the market.

“[There is] new legislation at customs for material imports to Turkey. Extra formalities are needed to verify products…[there are] blockages and long queues at the border,” one trader said.

Several players said there are few or no new offers from Iran, in part because of the upcoming Iranian new year. Celebrations are due to start in the second half of the month.

One Iranian PP producer said it more or less closed all of its sales to all markets last week, since the Iranian new year holiday begins in the next 15 days. It also noted that it sold material into Turkey at just below $1,200/tonne CPT (carriage paid to), but that this might not still be a representative price for end-users.

The producer added: “No firm offers have been heard from Egypt or Europe into Turkey.”

Players in both markets said there are also few offers from the Middle East due to turnarounds and planned shutdowns expected in March. Some producers said they are sold out of PP for the rest of the month, making the overall situation very tight.

The contract price of upstream propylene increased by €105/tonne ($117/tonne) for March, while the upstream ethylene March contract price also rose by €100/tonne – increases that players say are being passed on to the PP and PE markets.

A producer said: “[The price rise] is based on monomer increases in Europe.”

However, a PP trader said it believes the sudden increases reflect panic buying and speculation, as well as the underlying market balance, noting that prices should be lower compared to China.

It added: “supply was comfortable up to the trucking issue.”

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