Price and market trends: Bullish sentiment in Turkey PE, PP market continues into May

16 May 2014 09:57 Source:ICIS Chemical Business

Increased demand in some polymer grades plus restricted supply and stocks are improving the outlook for the country

The bullish sentiment in the Turkish polypropylene (PP) and polyethylene (PE) markets that started to emerge at the end of April has continued into May with higher bids and offers as well as done deals, sources said on 7 May.

“The market has slightly improved [for] high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) demand,” a Turkish trader said, adding: “We have sold out all goods in the warehouse. Now, we are sourcing new deals.”

The previous week, spot prices for PP raffia and fibre shipped cargoes from the Middle East and India rose $10-30/tonne.

HDPE spot prices rose $10/tonne, and LLDPE shipped cargoes saw an increase of $20-30/tonne.

Most of these increases were attributed to limited availability rather than improved demand at the end of April, but now demand seems to be picking up for some grades.

“Business has started picking up in Turkey, finally. It’s moving in the right direction and prices, depending on grade, have increased,” a supplier with production in the Middle East said.

“Demand picked up for both HDPE and LLDPE, and offer prices of Middle Eastern [suppliers] and all other sources for May are $20-30/tonne higher,” a Turkish trader said at the end of the previous week.

The market for some products remains stable to tight because of better netback opportunities in China limiting material available to Turkey, despite Chinese import prices remaining mostly stable last week due to the May day holiday on 1 and 2 May.

Stock levels
In addition, Iranian material remains scarce in the market compared to imports seen in March. Several reasons were given for the lack of Iranian product into Turkey, including production problems at some facilities in Iran, as well as trucks being delayed at the border.

“There is a problem with Iran. Trucks are all waiting to get into Turkey because there is the fruit season, watermelon season, which is getting priority,” a source said. The fruit trucks are given priority to get into Turkey because of the perishable nature of their cargoes, and this is delaying trucked cargoes of PE and PP from Iran.

Many buyers in Turkey have kept stocks low because of the uncertainty around the direction of the polymers market, and the wider Turkish economy following political problems at the beginning of the year. The devaluation of the lira caused many buyers of polymers for conversion or manufacturing into finished goods for the domestic market to buy cautiously because of a lack of end-user demand.

However, there appears to be signs in the market that sentiment is improving, and demand, in some areas at least, is returning.

In the PP market, fibre demand is stronger than raffia, with confirmation of done deals heard at higher levels this week.

“Fibre in Turkey is still strong. Raffia also picked up but not as much,” the supplier said.

By Matt Tudball