PP's bearish bias has prevailed since June as a range of factors, including tepid derivatives demand, falling upstream costs and global weakness have weighed heavily on suppliers. grant. Saudi Arabian producers have been very active amid ample supply, not to mention subdued demand from China and Europe.
Saudi Arabia's PPH drops 8-10% in just two weeks
Recently, Saudi suppliers have been more active than other sellers, including Russian manufacturers. This sentiment was mainly due to manufacturers piling up inventories amid shortages of factory-related problems and low demand for imported goods in Asian markets, as producers China has started huge capacity for several years now.
Market participants in Turkey argue that: “The official recession in Europe appears to be a new pressure on markets, not to mention a slower-than-expected recovery in other economies. China and Southeast Asia. In fact, the Saudi manufacturers somehow put more effort into increasing their sales than the Russian sellers.”
Raffia prices fall below $950/ton CIF Türkiye
PP has been entrenched in a bear market for the past few months. According to weekly average data, prices of imported Saudi raffia and fiber hit their lowest levels since August-September 2020 after the most recent rapid decline.
Accordingly, the price of Saudi raffia is estimated to decrease by $70/ton from last week to $930-950/ton CIF Turkey, taxable at 6.5%, cash, with transactions in low segment. Fiber and inj. Saudi Arabia is estimated to reduce 20-40 USD/ton to 960-1000 USD/ton by similar methods.
New segments in China, where PPH prices in the Middle East touched around $810/ton CIF in the low segment this week, prompts expectations for prices in Turkey to decline in the near term.
“Some converters plan to shut down their factories during the extended Eid al-Fitr holiday at the end of June. Persistent cash problems could be a problem,” said one trader. Another factor keeps demand for both plastics and finished products to a minimum. In the meantime, market participants will be watching for the impact of the Turkish Lira depreciation on the Lira business in the coming days.”
Local PPH, copolymer prices hit new lows
The strong erosion in the import market also led to a downward distribution of distribution channels. The domestic raffia price range is estimated to decrease by 40-50 USD/ton to 1300-1370 USD/ton exported to Türkiye, including VAT compared to last week. Domestic PPBC inj. is estimated to decrease by 20-40 USD/ton to 1420-1470 USD/ton by similar methods.
The drop was also reflected by Petkim's spot price falling as competitive quotes in the Middle East forced the local producer to revise its spot quotes for another week. It's important to note that the manufacturer will continue to produce plastic pellets during the holidays, which can put pressure on.
Is the price about to bottom after the sharp drops?
The new low has led some Turkish market participants to question whether the PP market may be nearing a bottom. According to weekly average data from ChemOrbis, Saudi Arabian PP raffia price in CIF Turkey is currently at a low year-to-date gap compared to China's import market. While this has fallen from $160/ton last week to $105/ton, Türkiye may not have much room for further reductions.
However, market participants concur that the upcoming holiday season, economic difficulties and volatile global PP market movements could drive the trend down. “The drop may cool somewhat if China shows signs of stabilizing,” said one market participant. However, tight liquidity, easing supply and low global consumption are likely to continue to affect the outlook unless resin demand actually picks up.”
