Tight Supply Supports October PP and PE Outlook in Turkey

Polyolefin markets in Turkey are expected to end September with supply availability playing a larger role than production costs. PP and PE prices continued to rise during the month, with limited availability becoming the key factor behind the latest increases.

Crude oil prices have moved sharply amid ongoing geopolitical uncertainty in the Middle East. However, market expectations for October are increasingly centered on another round of supply-driven price increases.

Importers continue to report extended delivery times for both PP and PE, keeping the near-term supply outlook tight. At the same time, solid demand from China and India is discouraging suppliers from making aggressive offers to Turkey. Better netbacks in these markets are giving sellers less incentive to reduce their price targets.

Import PPH Offers Below $1200/ton Fade

Import homo-PP offers below $1200/ton CIF Turkey have largely disappeared as availability has tightened across key supply origins.

A Saudi Arabian producer has remained absent from the market since last week after completing its September sales. Russian spot availability has also been limited because of extended lead times. Following earlier production disruptions, Russian suppliers have been prioritizing contractual commitments, leaving fewer volumes available for spot buyers.

As a result, Saudi Arabian and Russian homo-PP offers are now reported at $1200/ton CIF or higher, while nearby cargoes are reaching as much as $1250/ton CIF.

PP fibre and non-woven grades are reported to be particularly tight. Market sources also indicated that another Saudi Arabian producer had reduced operating rates because of shipment difficulties, although this information has not been confirmed by primary sources. Shipments from the United Arab Emirates have also faced difficulties.

Cautious replenishment by traders and unfavorable netbacks are adding to the supply pressure. These conditions are making Turkey less attractive for global suppliers compared with other destinations.

Import Middle Eastern PP raffia and injection prices in India moved above Turkey's levels in early July, with the premium widening gradually afterward.

At the time of writing, India was trading around $160/ton above Turkey despite the freight differential. This price gap has encouraged Middle Eastern suppliers to direct more cargoes toward India.

Meanwhile, CIF Turkey import prices have remained broadly in line with Middle Eastern PPH offers in China since late August, further reducing Turkey's attractiveness as a destination.

Cost support has also remained in place despite fluctuations in Brent crude futures. Europe's October propylene contracts are expected to settle higher, supported by the sharp increase in spot naphtha costs over the past month.

PE Sellers Enter October With Firm Offers

PE suppliers are also maintaining a confident stance ahead of October, supported by strong sales into China and India. Better margins in these destinations compared with Turkey have reduced the incentive for sellers to offer aggressively to the Turkish market.

US PE offers have been limited since last week. Some market participants believe American suppliers may have reduced inventory pressure after achieving healthy sales into Asia.

Russian and Uzbek PE availability has remained tight, while lengthy transit times from the Middle East continue to create additional supply concerns for Turkish buyers.

Potential US sanctions against Iran have added another layer of uncertainty. This is discouraging some buyers from sourcing Iranian PE and could further reduce the number of import sources available to Turkey.

Under these conditions, PE prices are expected to remain firm during the early part of the fourth quarter.

Cost pressure could provide additional support, with Europe's October ethylene contracts expected to settle higher. Rising naphtha costs over the past month have more than offset the decline in spot ethylene prices.

Netback pressure is also visible in PE. Middle Eastern LDPE, LLDPE and HDPE film import prices in Turkey have been trading around levels in China or slightly below them.

At the time of publication, Turkey's import PE film market was also around $100/ton below India's level, further highlighting the weaker netback available to suppliers selling into Turkey.

October Price Direction Remains Firm

A market participant expects polyolefin prices to remain firm in October. Even if logistics disruptions in the Black Sea and Middle East improve, sellers may continue trying to preserve the current price momentum.

With Turkey already trading below several other markets, the scope for the sharp seasonal price declines traditionally seen during November and December may have become more limited.

Market participants will continue watching geopolitical developments, crude oil movements and the approaching Chinese holidays, as these factors could influence supply availability, trade flows and regional price direction.

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