News Code : 42921

Petrotahlil:The firming trend of PP faltered earlier this month amid wider economic concerns and Ramadan lull after prices rose steadily since January. Players are now discussing whether or not a downturn will start for PP raffia while fibre holds relatively stable.

More supply sources available in raffia, fibre has limited alternatives

The fact that more import sources have been available for raffia has caused the sentiment to weaken among buyers by mid-May. Poor domestic end demand amid the high USD/TRY parity also contributed to the shift in the sentiment.

Some sellers have already offered discounts in a bid to stir buying appetite for raffia. Plus, the emergence of competitive Turkmenian raffia offers was blamed for the slight discounts from other origins in the local market.

Fibre, on the other hand, has been still limited in terms of supply with not many alternative sources, which helped fibre outperform raffia during the last couple of months.

Raffia-fibre gap widest in years

According to ChemOrbis Price Index, the gap between import fibre and raffia prices currently stands at $110/ton on a weekly average. Fibre has continued to carry a large premium of beyond $100/ton over raffia since the delta between the two products hit an all-time high of around $125/ton by mid-March.

Players think that raffia might pioneer price drops in June amid more than sufficient supplies. “We expect to hear the levels below the $1200/ton CFR Turkey threshold soon,” noted a large scaled buyer.

However, fibre might hold steady for a while more as the ongoing tightness may counterbalance waning demand.

June expectations turn softer on thin trading

Underlying demand for all polymers has taken a knock from slow end markets as economic concerns and political uncertainties took center stage in the recent weeks. Purchasing volumes were hand to mouth as no tangible development was foreseen in activity amid Ramadan lull as well as the upcoming holiday and re-run of Istanbul elections next month.

Softer China also puts pressure on Turkey

Players will also be monitoring the developments in China,where local homo-PP prices plunged to 6-month low on a weekly average last week, according to ChemOrbis data. China’s import PP market remained flat on the back of limited overseas supplies under pressure from the local market and the depreciating yuan against the USD.

According to ChemOrbis Index, Turkey’s premium over import PP raffia prices in China has slightly narrowed to $72/ton on average recently. That is to say, Turkey continues to offer healthy netback to global suppliers, suggesting room for possible discounts.

 

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