Turkish plastics body PAGEV urges buyers to stop purchasing virgin raw materials

New York — Turkish plastics industry association PAGEV called March 30 on Turkish plastic manufacturers to stop purchasing raw materials and work with minimum stocks as part of a backlash against increasing raw material prices.

PAGEV said their members had displayed "unanimous support" for the measure at the body's general assembly March 20 and planned to cooperate with Chinese manufacturers' associations by purchasing only when inventories reached critical levels.

It said recycled material should be purchased in preference to virgin material, which should be avoided where possible.

"As new petrochemical facilities come online in China in June 2021, raw material supply will increase and prices will begin to fall. To expedite the process, all manufacturers should stop purchasing raw materials for as long as their inventory lasts, and work with minimum stock," PAGEV said in a press release.

The body planned to cooperate with Chinese plastics trade organizations ahead of new Chinese capacity coming online in the summer which may lead to falling prices as Chinese import demand drops, PAGEV said.

"New petrochemical facilities that go online as of June will reduce China's import of polypropylene by 57%. To compensate for the loss of China, petrochemical companies will need to sell the excess supply to new markets, and lower their offers," it said.

The industry body described producer's raw material cost increases as akin to OPEC saying "petrochemical companies around the world have cut production and reduced the supply of raw materials under various pretexts, allowing prices to rise rapidly."

S&P Global Platts assessed CFR Turkey PP raffia grade spot price rose some $1,200/mt to a 12-year high of $1,940/mt in early March since hitting decade-low prices in Q2 2020.

CFR Turkey LDPE prices increased $1,150/mt to a 12-year high of $1,930/mt early March, with HDPE and LLDPE grades jumping over $850/mt over the same period, Platts data showed.

PAGEV also called on the Turkish authorities to remove import duties and protectionist measures on raw materials such as anti-dumping duties, noting that Turkish end-users, dominated by small and medium sized businesses, were resorting to shutting down production and reselling raw material inventories amid struggles passing price rises on to their customers.

Turkey is one of the world's largest plastic importers and an important global bellwether given the predominance spot trading plays compared with many other markets.

PAGEV members represent 88% of the Turkish plastic value chain and over 1,750 Turkish plastics companies, according to the body.