News Code : 42631

Turkish Election Results Further Cloud Polymer Demand Outlook

The outlook for Turkish polymer demand has becoming increasingly uncertain in the wake of local elections throughout Turkey on March 31, market participants said this week.

Turkish Election Results Further Cloud Polymer Demand Outlook

Petrotahlil:

This week, following the elections, the PVC market still seemed to be looking for direction.

"PVC in Turkey is very quiet, the construction industry is sedate, tenders postponed. The industry is at a standstill," a source said Wednesday.

Although some price recovery has been seen in the Turkish market, with HDPE film spot prices up $10/mt on the week to $1,070/mt Wednesday, this recovery remains tentative and demand continues to be a major concern for many in the market.

Ahead of the elections, many market sources expected wins for the ruling AK Party, but wins for the opposition CHP in major cities, which are being contested by President Erdogan's AKP, have added an additional note of uncertainty to the market.

"I was hopeful to see better activities but we have seen election chaos this week on who won, who lost," one source said, adding that this had resulted in "very quiet markets."

Early April has seen a return to pronounced fluctuations in the value of the Turkish lira against the US dollar, in the wake of the local elections.

Market sources had previously said they expected greater currency instability following the elections, pointing to what some viewed as short-term government attempts to control the value of the Turkish lira ahead of elections.

Turkish polymer demand is directly linked to the wider Turkish economy and was under pressure throughout 2018 amid inflation and a weakened currency. Currency fluctuations play a key role in demand within the Turkish market. As Turkey is a major importer of polymers, PP, PE and PVC are widely purchased in US dollars. However, end-products are sold in the Turkish market in Turkish lira.

With Turkey entering a recession in late 2018, CFR Turkey PP raffia spot prices declined to their lowest point of 2018 on December 19, slipping to $1,125/mt, compared to a peak of $1,340/mt in March of that year, according to S&P Global Platts data.

CFR Turkey HDPE film prices also reflected the wider economic situation, falling to $1,080/mt on December 19 from a peak of $1,330/mt from late May to early July, according to Platts data.

CFR Turkey PVC prices fell gradually in the same period, tracking declining activity in the construction sector and dropping by over 8% from $975/mt in March 2018 to $890/mt on April 3, Platts data showed.

 

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