Turkish PP, PE markets still feeling effects of coup attempt

Focus article by Matt Tudball

LONDON (ICIS)–The Turkish polypropylene (PP) and polyethylene (PE) markets are still being negatively impacted by the political uncertainty in the aftermath of the attempted coup on 15 July with buyers severely limiting purchasing activity, sources said on Thursday.

Buyer have limited activity amid on-going government investigations into companies with suspected ties to the coup organisers, the sources added.

There is almost no buying taking place in the Turkish markets, sources added, and the deals being done are for very small quantities of a couple of hundred tonnes.

“Demand wise it’s really bad. All customers are cautious, extremely cautious,” a Middle Eastern PE producer said.

A second Middle East producer said it has offered PP grade to Turkey on a 100% cash in advance only, and is just offering high density polyethylene (HDPE) via its bonded warehouse, to which is has cut its allocation levels to Turkey by 50% because of the uncertain outlook.

With the current political, and to some extent economic, outlook in Turkey still unclear there is concern that some suppliers mare look to other markets to sell material previously allocated for Turkey.

“Some producers will avoid Turkey because of the political and economic situation there,” a Turkish trader said.

Despite buyers’ stock levels thought to be nearing their end, buyers are being cautious about who they purchase from in case the seller is under investigation for links to the coup attempt.

Similarly, traders and sellers are also nervous about who they sell to following the investigation of a larger buyer in Turkey last month.

The recent arrests of top-level employees at Turkey’s sole PP and PE producer Petkim and at a large polymer buyer in the country have only added to the nervousness felt across Turkey.

Turkey PP raffia and fibre CFR and CPT prices

Prices for both PP and PE stagnated after an initial increases in the week after Bayram, and many sources said this week that the majority of prices are once again unchanged.

However, imports of HDPE blow moulding and film grade from Uzbekistan, which benefits from a 3% import duty rate, are putting some pressure on Middle Eastern and Iranian suppliers of those grades.

Sources were uncertain exactly how long the current situation in Turkey will last, in terms of both the political issues and also the lack of demand from the polymers market.

Some believe it may improve as soon as next week because of the low stock levels, while other do not see any improvement for the rest of August.

What players do seem to think at the present time is that September should be a much better month in terms of prices and demand as desperate buyers come back to the market to build inventories but facing a possible shortage of supply on some grades because suppliers have sent material elsewhere.

In the meantime, participants continue to wait and watch for developments in the Turkish market.