Korean Polystyrene, PTA Producers Worry About Disruptions In Exports To Turkey

Korean polystyrene, PTA producers worry about disruptions in exports to Turkey

19-Jul-16

South Korean polystyrene and purified terephtalic acid producers are worried about possible disruptions in exports into Turkey, after the failed military coup shook confidence and created uncertainty in one of the largest export destinations for South Korean makers, as per market sources in Platts.

"There might be some negative impact on South Korean PS exports, as major ports in Turkey were heard shut. If this situation continues for a long-term, exports of South Korea-origin PS will likely be disrupted," a South Korean PS trader said Monday. As of Monday afternoon, there had been no reports of any immediate impact on Turkish PS production, and any disruptions in South Korean PS and PTA exports. A South Korean producer said there was "so far no impact" on the PTA market, adding that it would take more time for the exact situation to become clear. However, there are increasing concerns about this issue, as Turkey has been one of the major export destinations for both PS and PTA makers in South Korea, after the South Korea-Turkey Free Trade Agreement, which came into effect on May 1, 2013.

South Korea became the second biggest high-impact polystyrene supplier to Turkey after Belgium in 2013, and has remained so as of 2015, data from Turkish statistical agency, Turkstat showed. With the South Korea-Turkey FTA coming into effect from 2013, import duty on South Korean PS, which used to be at 6.5%, was abolished triggering a sharp rise their inflows into Turkey. South Korea-origin HIPS exports into Turkey more than doubled year on year in 2013 to 3,333 mt, according to data from Turkstat. While in 2015, Turkey imported 4,205 mt of HIPS from South Korea in 2015, the data showed.
According to the latest customs data available from South Korea, the country exported 1,279 mt of HIPS to Turkey in June 2016, up 37% year on year. For general purpose polystyrene, Turkey imported 24,337 mt of South Korea-origin GPPS in 2013, which had more than tripled on year, the data showed. In 2015, the volume jumped to 25,367 mt.

For June 2016, South Korea exported 687 mt of GPPS to Turkey, up 15% on the year, South Korean customs data showed. South Korea produces about 485,000 mt of GPPS and 320,000 mt of HIPS, according to S&P Global Platts data.
The FTA also boosted South Korean PTA exports into Turkey, with Turkey importing 55,093 mt of South Korea-origin PTA in 2013, more than 14 times from a year ago, Turkstat data showed. In 2015, Turkey's PTA imports from South Korea rose further to 262,028 mt, up 23% year on year. In June 2016, Turkey was the single largest export destination for South Korean PTA at 41,695 mt, up 27% year on year, South Korean customs data showed. Out of South Korea's total June PTA exports of 181,056 mt, roughly 23% went to Turkey, the data showed.

With both China and India becoming increasingly more self-sufficient on PTA, South Korean producers have been forced to idle some plants this year and re-focus their exports to the European Union and Turkey because the existing FTA gives South Korean producers advantages over other Asian producers in those markets. "Europe and Turkey are the biggest markets for us now," a South Korea PTA producer said Monday, but added that he had not yet been in contact with his Turkish customers to check if there would be any impact following the recent events.