Europe ran counter to global uptrend
Europe ran counter to global uptrend
Polyolefins followed a firmer trend during H1 September after an ongoing upward pressure from China helped sellers renew confidence in Turkey. Poor netbacks to China prompted more sellers to give up on Turkey which reduced supply, except for Europeans.
Major polyolefin markets including China, Southeast Asia, Turkey and Egypt opened September on a firmer note. Production hiccups driven by two hurricanes in snatches led to a knee-jerk reaction in the markets. PE was particularly affected by FM declarations from the US at a time when LDPE availability was already tight across the board.
A growing shortness sent LDPE prices to multi-year highs in most markets, while LLDPE and HDPE rose albeit in more modest amounts. PP prices also displayed a firming trend although not as notable as PE.
The appreciation of the yuan against the USD spurred healthy demand from Chinese buyers for imports which pushed prices up versus a weak local trend. This coupled with pre-holiday restocking in the country and unexpected output issues across the board pushed other outlets north as well.
Nonetheless, weaker-than-expected activity has kept Europe’s reaction to bull markets thin so far. Stable ethylene and propylene contracts also contributed to the scene and triggered rollovers from sellers in Europe’s spot markets. Suppliers even conceded to small discounts on their transactions as the month proceeded.
€/USD parity blocked hikes from Europe to Turkey
In Turkey, both PP and PE prices posted gains for various origins including Middle Eastern, Russian and Iranian. This was in sync with dwindling supply, supportive Asian markets and resuming restocking. US, South Korean, Uzbek, Iranian and Azerbaijani sources were absent due to better appetite in China or offline capacities.
An increasing number of European polyolefin offers emerged since September started off, while they were indifferent to rising prices of other origins. Sellers elected to offer their volumes with rollovers from August, taking the unfavorable €/USD parity into account.
European deals formed the low end of the market
In the PPH market, West and South European PP fibre was traded at $1040-1060/ton CIF Turkey, cash no duty. PPRC inj. and type 3 pipe were sold at €950-970/ton ($1125-1150/ton with the recent parity) with the same terms.
LDPE hikes in Turkey lagged behind a big leap in China and the market continues to lack premium even after the latest round of increases. European LDPE film prices stood at $1070-1110/ton CIF on a dollar equivalent basis with the range including South, West and Central European origins.
HDPE pipe 100 (natural) cargoes from Central Eastern Europe were mostly sold at €850/ton (around $1010/ton), while HDPE film was talked at €800/ton ($950/ton). Meanwhile, West European LLDPE c6 film showed up at $920/ton CIF Turkey.
What lies ahead for October?
The outlook calls for a stable to slightly softer path in the European PP and PE markets. The sentiment is weighed on by unsupportive buying sentiment amid COVID-19 outbreak, comfortable stocks and volatile feeds. Whether or not the absence of import cargos particularly from the US will prop up the markets is a question mark for now.
Turkish buyers seem to have met their needs, paying some monthly hikes. The market will be in search of a direction between still poor netbacks to China and economic woes.
Players will keep a close eye on the future direction of China’s import markets amid National Day holiday due October 1-8, multi-month high ethylene and propylene prices in Asia and fresh capacity additions coming up soon.