Weak Turkish lira affects PE sentiment despite certain grades strengthening

LONDON (ICIS)–The weak Turkish lira has softened further this week, dampening sentiment in the polyethylene (PE) market, but there are a few signs that buying in some PE grades could be getting stronger, sources said on Thursday.

Any upturn is expected to be limited in the short term, however, and the weak currency makes business hard for converters and traders alike.

The Turkish lira weakened further this week against major currencies like the US dollar and the euro. The lira (TL) closed trading on 8 November at an exchange rate of $1:TL3.87, while against the euro it closed trading at €1:TL4.49.

Fresh cargoes were not easy to come by with some Turkish PE grades trading at the lowest global level, to the point where some players were considering buying material in Turkey to ship to China.

The low prices currently trading, or offered, as business was sometimes very slow, meant that sellers were keeping away and seeking better netbacks where they could get them.

“It is really, very strange here regarding the market status,” said one player. “[It] seems to be diverging more and more compared to the other regions.”

Traders with material are offloading stocks ahead of the year-end, and offers are abundant.

Local producer Petkim’s recent price drops also added to the morose mood in the market, said sources.

One player highlighted that these “erratic moves” were leading to a stronger entrenchment not to buy, and inventories were high with buyers.

“Nobody will buy unless it’s a bargain deal,” it said.

And, with current numbers in Turkey often lowest globally, this was not probable.

In the high density polyethylene (HDPE) film sector, there was some increased buying this week, however.

One player even said it was planning to buy in Turkey and export to China, where HDPE film activity was strong and prices high.

Another seller said that with Turkey so low compared to other regions, buyers were coming to buy as they believed there was no more room for prices to fall, and that new offers from importers had to be higher.

“Looking at China, prices are firm,” said one player. “Some traders bought a lot this week – also some end users – and we stopped our sales.”

Linear low density polyethylene (LLDPE) was still under downward pressure, however, and levels were barely above $1,100/tonne CFR (cost and freight).

PE is used in packaging, the manufacture of household goods, and also in the agricultural sector.

Pictured: Turkish notes and coins
Source: Veronica Garbutt/REX/Shutterstock

Focus article by Linda Naylor