Turkish traders disagree over spot PP price direction

Focus article by Matt Tudball

LONDON (ICIS)–Traders in Turkey were in disagreement about the direction of polypropylene (PP) spot prices, with some seeing stable-to-firm price levels, whereas others see reductions because of poor demand, sources said this week.

Only one Middle Eastern producer had announced May offers by Thursday afternoon, sources said, and that was for monthly contract business, and not related to spot prices.

Several market participants were returning from the ChinaPlas event in Shanghai, which ran from 25-28 April, and had limited feedback on May price ideas.

A second Middle Eastern producer said it would announce its May PP offers from next week once it had gathered feedback from the ChinaPlas event. However, the producer said it felt offer prices of $1,150/tonne CFR from the Middle East were quite high.

“News out of Turkey is demand is very low, and [it would be] very difficult to increase prices in anyway on PP and high density polyethylene (HDPE). A…increase flies in the face of the signals I was getting [from the Turkish market],” the producer said, adding buyers were able to get material quite easily.

A Turkish trader disagreed, and said it felt quite clearly that PP spot prices would be higher for May, especially for fibre grade, having concluded a deal for Iranian fibre at $1,165/tonne CPT Turkey during the week.

“We feel May will be strong and not see reductions on the prices. All elements show May will be strong. Propylene increased in Europe, and Northeast and Southeast Asia C3 [has increased] in that region,” the trader said.

The trader said it expects CFR fibre prices from the Middle East to also increase in May because of limited availability and higher feedstock prices in Asia. It also said crude prices reaching $47/bbl should indicated Turkish PP prices can only move up in May.

“For raffia we don’t have any problem, supply is OK, but fibre is still tight. But people want to wait and see if there’s any reduction or not. Next week the Turkish market will be very hot,” it said.

PP, especially copolymer grades, have been tight in recent weeks due to restocking activity in India, but that has now come to an end, producers in the Indian market said previously.

However, other traders in Turkey did not share the view of the first trader, with one seeing raffia material from the Middle East at $1,000-1,050/tonne CFR Turkey this week.

“The prices are coming down and China also softening up,” the trader with the lowest prices said.

(Average CFR Turkey raffia vs. China and India Main Ports flat yarn (raffia) spot prices)

Chinese homopolymer prices have been stable to soft in recent weeks, with the low end of the CFR China flat yarn (raffia) prices dipping below $1,000/tonne last week.

A second trader said offer prices from the Middle East to Turkey were heard at $1,050/tonne CFR on Thursday, and the market was clearly down due to weak demand and a lack of firm bids from Turkish buyers.

A third said it could not sell raffia grade from the Middle East at $1,080/tonne FCA ex-bonded warehouse, which typically is $30/tonne higher than CFR prices.

“PP is the worst! The big [buyers], they have enough inventory to cover them until the end of July, and the small ones, they shut down. There is no buying interest,” the trader said.

Egyptian and Iranian offers will be made from next week, a Turkish distributor and Iranian producer said. A large buyer said it had not yet received any offers by Thursday afternoon.

A clearer picture of price direction will emerge next week once all parties have returned from ChinaPlas, and once producers have made their May offers and buyers have formulated their bids for May.