Producer drops July spot prices in Turkey PE, PP markets

LONDON (ICIS)–A Middle East producer has lowered its July polypropylene (PP) and polyethylene (PE) prices to Turkey because of soft demand and market uncertainty around the ongoing situation with Greece and the eurozone, a source close to the producer said on Wednesday.

The producer saw decreases on its PP raffia and fibre grades, and on its low density polyethylene (LDPE) grades to Turkey.

Earlier in the week a local producer in Turkey lowered its PP prices by $50/tonne, citing softening in the feedstock propylene price in Europe, which dropped €20/tonne from June.

The Middle Eastern producer said demand in the Turkish PP fibre market was almost dead, a sentiment echoed by other players in the Turkish market. Exports of finished goods, mainly of carpets produced using PP fibre and woven grades, to the Middle East have dropped further during the Muslim fasting month of Ramadan, having previously been negatively impacted by regional conflicts throughout 2015 to date.

With the ongoing situation between Greece and the eurozone still unresolved, and Greece’s position in the EU uncertain, buyers in Turkey are now also complaining of lower finished goods exports to Europe, the producer said.

This comes ahead of the European summer holiday period in mid-July and August, which will likely see trading activity with the EU drop further.

Polymer market players in the Middle East are bracing for another period of extreme volatility in crude prices amid uncertainties over Greece’s possible exit from the eurozone as well as Iran’s nuclear deal with six world powers, which have been extended to July 7, industry sources said earlier on Wednesday.

PP prices in China had also softened from mid-May, and players in the Turkish market often look to the Chinese CFR price as an indicator of where they believe their prices should be. Bearish sentiment in Asia only adds to similar feelings in Turkey.

However, there are some in Turkey who believe prices may now start to stabilise around current levels. The Middle Eastern producer said there is already some congestion in ports in Saudi Arabia because of port workers working reduced hours during Ramadan. This may limit supply to Turkey, which may have a stabilising effect on the prices.

A source in the market highlighted that there still remains some tightness in the European markets despite several force majeures in that region being lifted as a factor that could also keep prices from slipping too low in the Turkish market.