Turkish PP, PE buyers expect further drops in slow market

LONDON (ICIS)–Polypropylene (PP) buyers in Turkey are expecting to see further downward movement in prices this week and into July because of a slowdown in demand caused by economic and political uncertainty, and Ramadan, sources said this week.

Prices in the Turkish market started to soften earlier in the month ahead of the general elections on 7 June, which caused a drop-off in demand both before and after the country went to the polls.

With politicians in Turkey now in the process of trying to form a coalition government or face going to an early election, and the beginning of the religious fasting month of Ramadan on 18 June, demand does not show any signs of improvement in the near future.

In the city of Gaziantep in southern Turkey, PP fibre buyers were showing a very bearish attitude.

“Nowadays the market is too slow in Gaziantep, the main reason [being] economic…stagnation and Ramadan,” a buyer of PP BCF fibre said.

In the PE market, sentiment among buyers was no different, with players talking of lower price expectations for July.

“We are waiting for a price decrease  of $50/tonne in all grades,” a large buyer of low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) said, adding: “Customers are also waiting for price decreases , so trade is slow.”

With prices in other region starting to soften, Turkish buyers may well be expecting to see similar drops in Turkey.

However, producers are seeing prices as more stable for PP and PE.

“The prices are stable compared with last week,” a local producer said of the PE market, adding: “PE is still tight in Turkey, and after the election there is uncertainty about the political situation, which affects the market. But demand is not bad, but not good.”

A Russian producer serving the Turkish PP raffia market is also seeing a reduction in available material in Turkey, which could be a factor that is stopping Turkish raffia prices from seeing particularly large drops.

“There is not so much ready [raffia] product in Turkey. Today only Turkmeni [raffia], and… that is limited volumes,” the producer said. Traders who bought product in April and May have now mostly shipped those volumes, and the producer said there was perhaps only about 1,000 tonnes left to come.

The producer said good demand in the Russian market is limiting exports from Russia, and there were no offers heard for raffia from Iran or Europe, which is still currently tight. Saudi Arabian material, if offered, may be delayed in reaching Turkey during Ramadan.

With Chinese prices for flat yarn (raffia) at $1,200-1,230/tonne CFR (cost and freight) China Main Port, prices in Turkey could be as low as $1,250/tonne CFR, the producer said, but the limited volumes of raffia currently available in Turkey are keeping prices more in the $1,300/tonne CFR area.

However, several players in the market do see further room for reductions in Turkey, with one trader saying late Tuesday it expects PP prices to go down to $1,250/tonne CFR.

With Egyptian raffia being offered to the Turkish market again this week following a few weeks of absence, any tightness in raffia may be alleviated.

 “We are expecting that prices might get loose in the next coming weeks,” a distributor said about the raffia market in light of the new material from Egypt.

Focus article by Matt Tudball