Turkey’s PP and PE Sellers Target September Hikes, but Demand Remains Uncertain

Turkey’s PP and PE markets are approaching September with sellers aiming to defend the price increases achieved since mid-July and pursue further hikes. However, the bullish outlook has become less clear. Unfavorable netbacks compared with Asian import markets, longer lead times for cargoes from Saudi Arabia and the UAE, and relatively low inventories continue to provide support. At the same time, it remains uncertain whether the return of European market participants and the end of India’s monsoon season will create a more supportive global demand environment.

The decline in Brent crude below $90/bbl this week has reduced some of the cost-driven optimism that emerged when crude climbed above $94/bbl last week. More importantly, persistently weak downstream margins and tight liquidity among converters continue to make another round of resin increases difficult to implement. This is setting up a contest between sellers seeking to maintain firm targets and buyers resisting higher prices as the third quarter approaches its end. Meanwhile, upcoming European olefin contracts are generally expected to settle at rollovers or with only minor changes, amid weaker oil and spot naphtha markets in the region at the time of writing.

PP Sellers Retain Leverage Despite Weaker Oil Support

PP suppliers entered the final part of August with relatively strong leverage, supported by limited import availability and continuing logistics problems, particularly involving some Russian, Saudi Arabian and Omani ports. Congestion at Jeddah and extended delivery times for seaborne cargoes have increased the attractiveness of nearby material.

Supply concerns were also reinforced by limited spot Russian volumes following last week’s drone attack on the Tobolsk facility, while an upcoming shutdown in Kazakhstan added another constraint. Truck-delivered Saudi cargoes have served as an important buffer, preventing a more significant supply squeeze while also reflecting buyers’ increasing preference for reliable and relatively prompt deliveries ahead of year-end.

However, the latest decline in Brent has weakened one of the arguments sellers were expected to use in support of additional September increases. Downstream consumption also remains unconvincing, while the potential recovery in European demand following the summer holiday period remains under close observation.

September could offer a somewhat healthier external backdrop as Europe returns from its summer break and India gradually moves out of its monsoon season. China’s traditional peak demand period could also provide support after demand fell short of earlier expectations in August amid weakening support from Dalian futures and crude oil.

Stronger demand in these markets could improve suppliers’ alternative selling opportunities and strengthen their negotiating position in Turkey. A global trader expects the wide price gap between October shipments and nearby volumes to continue.

However, August demonstrated that supply and cost factors alone have limited ability to sustain a price rally when finished-product orders remain weak. Sellers may therefore test the market with further increases, but the success of these attempts will depend on whether seasonal restocking results in a meaningful improvement in resin consumption rather than simply a temporary rise in inquiries.

PE Firmness Varies by Grade

PE is also entering September with supportive supply fundamentals, particularly for LDPE and HDPE film, which have been tighter than LLDPE C4 film. As a result, market conditions remain highly dependent on grade, origin and delivery timing.

Market participants expect Middle Eastern HDPE film offers to move above LLDPE C4 film, as seen in Asian markets. LDPE has remained the strongest segment overall because of structural tightness and continuing transportation difficulties.

A significant premium for prompt or soon-to-arrive cargoes over material with longer delivery periods also remains in place. Traders have been reluctant to rebuild inventories aggressively because of logistics uncertainty and expectations of a possible year-end slowdown, while buyers have remained hesitant to commit to cargoes with extended lead times.

September PE discussions are therefore likely to begin with renewed attempts to raise prices. Nevertheless, the retreat in crude oil below key levels has made the outlook less clearly bullish than it was a week earlier.

Turkey’s relatively weak netbacks, tight prompt availability and limited spot Russian supply should help regular suppliers resist significant concessions, especially for LDPE and HDPE film. A normalization of seasonal activity in Europe, India and China could provide further support if it results in stronger global buying.

On the other hand, US PE sellers’ need to place cargoes ahead of year-end could keep competitive material available and limit the potential upside. A large trader expects American sellers to remain unwilling to make major price cuts, while noting that global demand will ultimately determine the market direction.

Downstream Demand to Determine September Outcome

Turkish converters are expected to remain cautious unless orders for finished products show a clear improvement after the summer break. LLDPE could be more exposed to discount pressure if competitive US cargoes remain available or Middle Eastern sellers become more willing to stimulate sales.

The market is therefore likely to continue showing a clear difference between supported prompt material and more negotiable distant cargoes. While tight supply continues to provide a degree of support, the sustainability of any new price gains will increasingly depend on actual downstream demand rather than supply constraints alone.

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