November expectations formed by weak fundamentals in Türkiye’s PP, PE markets

November expectations formed by weak fundamentals in Türkiye’s PP, PE markets


Sentiment in polyolefin markets has weakened for November in response to a murky demand outlook and a lack of supply concerns in Türkiye. PP and PE markets are likely to remain in gloom amid unsupportive global indications, not to mention ongoing cash problems at home.

Still, some players do not rule out the possibility of some support from crude oil futures amid the escalating tension in the Middle East, saying prices may follow a stable trend with only small discounts.

No glimmers of light appear for derivatives

Downstream demand has been mostly subdued in October, while limited end-product orders caused some converters to keep their run rates below the usual levels for this time of the year. As for PP, the peak season for textiles propped helped fibre suppliers maintain their prices but most traders admitted, “The season has had a limited impact on PP demand as several manufacturers have shifted to polyesters for some time now.”

Similarly, sack season has been drawing to a close, with a lack of coal tenders taking its toll on derivative demand. Some converters noted, “Downstream orders have lagged behind our earlier expectations while we continued to run our factory at 60% despite the season.”

PE consumers do not expect to see much revival in their businesses in the coming term. They cited macroeconomic issues and sticky inflation that hammer consumer spending as the reasons for the gloomy scene. “Buyers received their cargos secured in late summer, which kept PE demand tied to basic needs. We do not expect to see much change in activity as the year-end lull will probably kick in soon,” a packager noted.

Competitively priced prompt cargos loom over PP, PE

Some traders have been offering their materials with old costs at competitive price levels since H1 October, leading to a widening gap between the prompt market and the current cost of new shipment import cargos both for PP and PE.

Distributors remain willing to destock their materials in bonded warehouses to hedge against any possible drops going forward. “Russian materials on hand put a strain on the market since flagging demand came to the fore this month. These cheap cargos were also attributed to distributors’ need for cash,” a trader admitted.

PPH deals below the $1000 CIF threshold cause jitters

Sellers’ attempts to lift the homo-PP market up to protect their margins amid high upstream costs failed to materialize this month. Saudi Arabian prices at $1030-1040/ton for raffia and $1050-1060/ton for fibre CIF, subject to 6.5% duty, cash saw resistance from buyers in most cases as they formed the upper end of the import market.

Moreover, converters seemed to prefer to consume their stocks on hand rather than build up new cargos amid possibly limited orders from end users for the year’s end.

Adding to the scene were some transactions below the $1000/ton CIF threshold for PP raffia, according to a widespread market talk. Multiple players reported hearing deals at around $980-990/ton for Saudi cargos in special cases. Russian PP raffia and fibre with old costs emerged at $980-1000/ton FCA and curtailed activity further.

Russian materials make a scene for PE

Like PP, some traders tried to deplete their Russian LLDPE stocks in October as the arrival of bulky volumes for this origin coupled with a tepid buying appetite weighed on the sentiment. This also gave Middle Eastern sellers a hard time achieving their hike goals and resulted in trimmed offers on the high ends as the month wore on.

This week, prices were assessed stable to $10-20/ton lower on the week, with distributors remaining flexible on their pricing policies to generate better buying interest. LLDPE C4 film was assessed at $1280-1350/ton ex-warehouse Türkiye, cash inc. VAT but offers at around $1260/ton were said to be obtainable for Russian materials in certain cases.

China’s disappointing return from holidays couples with crude’s volatility

Apart from weak supply-demand dynamics at home, recent signals from global markets have also rubbed off on Türkiye’s polyolefin sentiment. China’s PP and PE markets have been steadily easing since the end of the Golden Week holiday earlier this month. Players blamed weak demand, falling Dalian futures and piling domestic stocks from the pre-holiday period as the main reasons behind the softening.

Meanwhile, Europe’s spot PP and PE outlets recorded some hikes this month before the sentiment started to be pervaded by an unpromising demand outlook for November, let alone expectations of lower olefin contracts.

On the other side of the coin, crude oil futures have been extremely volatile since political unrest broke out in the Middle East. This also caused a blurry outlook for the upstream chain, causing jitters among global players. At the time of writing, WTI and Brent oil futures traded $2/bbl above last week on average but stood below the September highs amid the war-driven fluctuations.

Markets also buckle under geopolitical uncertainties

Turkish players commented that the recent political crisis is likely to keep global PP and PE players on their toes in the near to medium term. A resin consumer said, “Markets have already been facing a slew of uncertainties regarding the economy and trading activity. The recent turmoil has added to the bleak scene.”

Players think that polyolefin deals are likely to see some softening next month so long as activity remains dull and the sentiment in other outlets, including India, Asia and Europe, stays discouraging. Underpinning this projection has also faltering support from ethylene markets.

“Even if the escalating turmoil in the Middle East propels crude oil futures higher, supply and demand are likely to be the main drivers of the market and push new import prices down by $15-20/ton next month. Oil movements may keep possible discounts in check though,” opined a player.

Meanwhile, a global trader said, “We do not rule out the possibility of an easing in US supply for the coming weeks as production hiccups will eventually end. The year-end lull may kick in by late November and trigger competitive prices for ex-USG PE cargos, on top of the lingering pressure from Russians.” Both for PP and PE, players also think that netback in Türkiye have not been unfavorable for global sellers, which may drive adequate allocations into the market by next month.