LONDON (ICIS)--On Wednesday, Turkish president Tayyip Erdogan announced the surprise, yet not totally unexpected, decision to move presidential elections from November 2019 to June of this year.
The elections are set to name the country's president following last year's referendum on a new Constitution, which effectively removes many powers from parliament and gives them to the president, moving the country to one ruled by an executive presidency.
This latest move can be seen as further attempts by President Erdogan to consolidate power.
The foregone conclusion being that he will win the vote in June despite it being an open election.
Turkey has been in a state of emergency since the coup attempts in 2016, which was extended at the same time the election was called. This has allowed the ruling AK party to neuter any opposition to the status quo, including political opponents as well as those in the press, among many other public bodies.
Much commentary has suggested that this latest move is to capitilise on recent popular foreign policy moves, such as the war against Syrian Kurdish militia, and prevent the vote taking place in the nadir of a deteriorating local economy.
Despite international suspicion of the move, polymer players in Turkey were upbeat on the effect of the vote on the petrochemical market.
The announcement halted the slump in the value of Turkish Lira, although this recovery has also itself now stalled.
The confidence in the reaction comes from two factors: The short lead time before the vote, and the certainty that comes with a single powerful established ruling party, unlikely to change in the foreseeable future.
Last year's referendum paralysed the market for much of the year, leaving prices to stagnate, as players were wary in the lead up and then after the results. They had not expected such a marginal victory for the Yes vote.
"People will not want to make decisions before the election," said one trader.
A little over two months remain before the vote on 24 June, and players expect the market to slow during this period but it will be far more constrained than the months leading up to the referendum result.
"People will refrain from buying, but then bend back to a normal mindset," said one supplier.
Following the election, expectations are mixed.
"A stable government in any country is more important for the economy," said a supplier.
However, many are not willing to provide an assessment, given there are so many variables in place.
"It might affect the Turkish market on positive or negative," said a trader.
"[My customers] are happy with the exchange rate and the currency [currently]. [We] Need to see what happens in the mid term," it added.
There are already underlying signs of potential issues in the future, however.
High density polyethylene (HDPE) 100 pipe sales have collapsed following the cessation of government bids, according to sources.
"Demand for HDPE PE100 softened considerably as state-owned pipe users have liquidity crunch and do not pay recently," a trader said last week.
The Turkish government has been funnelling funds into various large-scale projects but it is uncertain if this is sustainable in the long term and may have been an attempt to cover the worsening economy.
Following the election, there is potential that government may pull back on some projects to save money, diminishing the government demand for various plastics. This, in turn, could put a serious dent on demand for international product.
Not all players agree with this assessment, however. One trader was confident that the government would work hard to attract business, for instance.
"I believe the government will make the markets happy. They will inject some money to make the markets more commercial," it said.
There has already been multiple recent announcement of new petrochemical plants set to be built in Turkey.
A joint venture between Turkey's Metcap Energy Investments and Qatar's Fusion Dynamics plans to build an integrated energy and petrochemicals facility in Turkey's Thrace basin, a project which would include capacity for 400,000 tonnes/year of polyethylene (PE) and 600,000 tonnes/year of polypropylene (PP).
Numerous other petrochemical projects have been announced, including a $1bn plant by Algerian oil and gas major Sonatrech.
Turkey's administration seem keen to reduce Turkey's reliance on imports in the plastics sector and is making moves to encourage foreign investment in the country.
One trader remained unconvinced until more of these announcements result in some activity on the ground.
"There is no detail. In my opinion, it is not realistic. In the future we could have some details, source [of hydrocarbons], who will handle what, etc," said a trader in regards to the Metcap announcement.
"Hopefully it happens, it is good for Turkey," it added.
A sense of skepticism laced with optimism sums up the general consensus to this snap election announcement.
Players are focusing on the positives, but this situation provides little economic clarity.
Pictured: A bridge over the Bosphorus in Istanbul
Source: Hans Lippert/imageBROKER/REX/Shutterstock
Focus article by Ben Lake