Turkish PP, PE market ‘cannot get any worse’ – sources

Matt Tudball

25-Aug-2015

LONDON (ICIS)–Sources in the Turkish polypropylene (PP) and polyethylene (PE) markets voiced on Tuesday a bleak outlook for prices and demand in the country, with two separate sources saying market fundamentals cannot get any worse.

“What can be worse? We are already at the bottom [for demand]! It cannot get worse,” a producer supplying the Turkish market said.

Its view was echoed by a trader on Tuesday afternoon who declared the market is “so bad it can’t get any worse.”

Bids from buyers are now so low it is hard to determine if the offers are serious or simply trying to see exactly how far they can push their supplier.

Bids as low as $990/tonne CPT (carriage paid to) Turkey for Iranian fibre were being made by buyers according to one source in the market, but this number had not received any further confirmation from other market sources at the time of writing.

By contrast, bonded warehouse material was heard offered at $1,200/tonne FCA (free carrier) Turkey for raffia.

Still, the low number highlights the extremely bearish attitude buyers have adopted in the country.

The cautious buying sentiment has only been compounded by the drop in the lira against the US dollar and the general uncertainty around the political and economic situation in the country.

Turkish lira vs. US dollar – one month view (source: XE.com)

On Tuesday, the head of Turkey’s election board officially confirmed the country will vote again on 1 November after coalition talks following the June 7 election collapsed last week, according to Turkish news reports.

Stock levels are still very low on both the buyer and trader side, as no one wants to buy product only to find prices have dropped within the delivery window.

Buyers are also pushing their suppliers to match prices in Asia, where PP and PE prices are also in a downtrend as upstream costs fall.

Concerns are also starting to emerge about supply from Iran as freight costs increase in light of the ongoing military activity between Turkish security forces and the outlawed Kurdistan Workers Party (PKK).

While the military action has mostly been confined to the southeast corner of Turkey close to the Iraqi border, attacks on trucks with Iranian licenses plates has made it hard for buyers and traders in Turkey to get insurance on vehicles. Some sources in Turkey have also had problems finding drivers willing to travel to Turkey.

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