Turkey’s PP players at odds about market direction

Turkey’s PP market had started 2014 on a firm note amidst serious supply concerns, although this sentiment started to falter in the second half of January as increasing liquidity issues and the record-breaking dollar against the lira caused demand to cool off considerably, as per ChemOrbis. After having gained us$22-24/ton on average in the first half, import PP raffia and fibre lost US$37-52/ton on average in the second half of January, according to ChemOrbis Price Index. Following the settlement of the monomer contracts for February in Europe, Turkish producer, Petkim, also made a US$25/ton discount on its list prices in the last days of January. Now the activity in Turkey’s PP market is subdued with buyers retreating to the sidelines. Players are all wondering about the path China will follow after the New Year holiday in that country. They all agree that whether China starts to buy or not will set the tone of the market. Some argue that demand will remain slow in China after six months of a steadily rising trend and PP prices will trend lower as was the case in 2013. On the other hand, others put forth that limited stocks and a renewed buying interest will prevent price erosion or even bring higher prices. A large PP converter in Gaziantep said, “Turkish converters prefer to go with minimum stocks as they find it risky to secure cargoes under fragile economic conditions these days.” Regarding China’s possible post-holiday move, he cited, “China’s Manufacturing Index was at a six-month low. Therefore, I don’t think that demand will improve in China after the holiday. The market will be on a stable to soft note, we believe.” Another buyer who received a US$15/ton discount from a Saudi producer’s initially rolled over fibre price for February said, “Sellers are trying to hold the market firm for now with rollover requests. However, this is an attempt to avoid further price decreases. Many emerging economies are now struggling with the rising dollar and planning to tighten monetary policies. This will eventually hamper demand across the board.” Although Petkim’s discount has been followed by some distributors, others have preferred to hold their offers steady in the local market. “There is no point in selling prompt cargoes below our replenishment costs. Making discounts triggers further decrease expectations. We also think that China will start to buy after the holiday as buyers will be left with low stocks and regular suppliers don’t have large allocations,” an Istanbul based trader argued. According to ChemOrbis, at least two global producers offering Saudi cargoes also referred to these prevailing decrease expectations on the buyers’ side as wishful thinking. “Demand in India and Africa is not as bad as it is in Turkey. We also expect Chinese players to return to replenish stocks,” one source commented. Another source said, “Our supplier already has tight supplies, so they are not bothered with the decreasing purchasing power of Turkish buyers.”