Turkey PP, PE market takes tentative steps into September

LONDON (ICIS)–Turkish polypropylene (PP) and polyethylene (PE) prices were stable to firm at the start of September as the market started to show a small improvement in sentiment as it enters the new month, but upcoming holidays make the demand outlook less clear, sources said this week.

Middle Eastern PP raffia and injection prices saw increases for the first time since the failed coup attempt on July 15 as the market accepted early offers at higher levels from some producers, although other suppliers have yet to make official announcements.

(CFR Turkey LDPE, LLDPE, PP raffia prices)

Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) prices also rose based on higher September offers as the market seemed to accept that September prices will be higher than August’s.

Rising crude and firmer ethylene and propylene prices in parts of Asia may also go some way to explain price increases in Turkey. Some sources had previously pointed to bullish upstream sentiment as a reason to expect possible increases in September.

The rise in certain grades in Turkey can be seen as a positive sign, indicating buying activity could be returning to the market after weeks of limited trade because of uncertainty in the wake of the coup attempt.

An Iranian PP producer which had been absent from Turkey for most of August has started to sell fibre back into the Turkish market, and there have also been some fresh offers for Russian and South Korean PP seen this week.

Demand was expected to increase in September because buyers’ stocks are thought to be very low. However, a public holiday in Turkey on 30 August created a shorter working week, and the up-coming Eid al-Adha holiday also appears to be having a slightly negative effect on demand levels.

Previously, some sources said they expected to see an increase in buying activity in early September ahead of Eid, but buyers appear to be able to source sufficient volumes for their immediate needs, possibly from traders who have stock in warehouses in Turkey.

“Everyone is aware the market has reached the bottom and sentiment is positive, but demand is very bad [with] buying activity limited,” a trader in Turkey said Thursday.

Most participants are now saying it will only be after the market has returned from the Eid holidays, which end on 19 September, that the true level of demand will be seen and it will become clearer what kind of strengthening, if any, prices will see in Turkey.

In the PE market, some Middle Eastern producers said high density polyethylene (HDPE) film prices are more stable because of good availability.

Imports of Uzbekistan HDPE film and blow moulding have regularly entered the market over the last few months, even when demand was poor, and there is now a surplus in Turkey.

However, sources said the impact of the Uzbek cargoes appears to be more limited this month, and with Uzbek cargoes now being sold to buyers in Kenya, perhaps distributors are looking at alternative markets in order to off-load volumes allocated to Turkey.

July import data released by statistics agency Turkstat shows a month-on-month drop in imports from June to July as a result of the coup attempt, illustrating the drop in demand seen from mid-July onwards.

(source: Turkstat)

HDPE sellers from the Middle East and Iran face additional challenges from October onwards when imports of HDPE and LLDPE from Egypt’s Ethydco plant are expected to start arriving in Turkey. As with Egyptian PP, these imports will carry a 0% import duty compared to 6.5% for the Middle East and Iran, and also have favourable delivery times – possibly making a more attractive alternative for Turkish buyers.

In the meantime, however, the market will wait to see if buyers decide to do some pre-Eid buying, or sit on their current stocks and hold out until 19 September when the Turkish market should, hopefully, come back to life.

Focus article by Matt Tudball