Price and market trends: Turkish PE, PP prices take uncertain turn after Eid

15 August 2014 10:37 Source:ICIS Chemical Business

Drops in the European August ethylene and propylene contracts could be causing buyers to wait for prices to follow suit

The direction of Turkish polypropylene (PP) and polyethylene (PE) have taken an uncertain turn following the Eid holiday, as buyers talk of lower offers from traders while producers target increases, sources said on 5 August.

Ahead of the Eid holiday, which signals the end of Ramadan, several Middle Eastern producers supplying the Turkish market talked of higher numbers for a variety of grades of both PE and PP mainly because of market tightness.

“Yes, we are increasing prices,” a producer with facilities in the Middle East said on Sunday.

Suppliers on average were looking for August increases in the region of $20/tonne for shipped cargoes on a cost & freight (CFR) basis, with the producer adding that it was looking to increases its ex-bonded warehouse prices by up to $40/tonne.

PP raffia prices were assessed at $1,610-1,650/tonne cost & freight (CFR) Turkey last week, according to ICIS, while PP fibre grade was assessed at $1,640-1,670/tonne CFR Turkey.

However, post-Eid, several traders have had buyers telling them of lower offers in the market, and buying demand appeared slightly reduced in the first half of the week as buyers hold off making purchases.

The €15/tonne in the European August ethylene contract and the €20/tonne drop in the August propylene contract in Europe could be causing buyers to wait and see if Turkish prices follow suit.

“Everyone is waiting for a reduction because of the ethylene drop,” a trader in low density (LDPE) and linear low density polyethylene (LLDPE) said.

“People are waiting [for reductions in LDPE and LLDPE prices]. Other buyers are saying $15-20/tonne reductions [for August material]. But maybe they are fishing,” the trader said.

Buyers may be trying to play traders off against each other by discussing lower prices early in the week, as some traders in the Turkish market are still suffering from a lack of working capital.

“Some traders/distributors are selling product at low prices because they need the money. Therefore buyers are going to traders rather than producers,” a PP trader said on 5 August.

As yet there has been no confirmation from the buy side from either producers or traders of done deals at lower levels.

Demand levels are still relatively low, possibly as a result of buyers’ reluctance to make large purchases, and also because it will take time for the market to return to normal after the public holidays the previous week.

By Matt Tudball