Turkish PP prices reach lowest levels in 2024 amid economic headwinds

Polypropylene prices in Turkey have fallen to their lowest point this year, pressured by ongoing economic challenges and weak market demand. According to data from S&P Global Commodity Insights, PP Raffia and Homopolymer Injection spot prices were last assessed at $990/mt CFR Turkey on Nov. 27, marking the lowest levels for these grades in 2024.

The Turkish economy continues to grapple with high inflation and elevated interest rates, factors that are dampening demand in the petrochemical sector. The Central Bank of the Republic of Turkey maintained its benchmark interest rate at 50% on Nov. 21, citing persistent inflation concerns and uncertainties in the disinflation process. This decision has led to increased borrowing costs for businesses reliant on credit lines, further constraining operational financing.

"Producers are trying to clear their inventory; the market is still so low in demand," said a trader.

Inflation remains an issue, eroding consumer purchasing power and affecting demand for PP products. Data from the Turkish Statistical Institute showed an annual inflation rate of 48.58% in October, slightly down from 49.38% in September. Month-on-month inflation rose to 2.88% in October, up from 2.47% in the previous month.

The depreciation of the Turkish lira against the US dollar throughout 2024 is further exacerbating the situation. The currency was valued at 34.46 against the US dollar on Nov. 20. The weakening lira increases the cost of imports, including raw materials like PP, putting additional strain on converters who rely heavily on imported resin.

Market participants are approaching the year-end with caution, managing inventories carefully amid expectations of continued weak demand. Expectations of further price declines are causing buyers to delay purchases in anticipation of securing materials at lower costs in the near future, according to market sources.

Despite the sluggish domestic market, major exporters like Saudi Arabia—Turkey's largest PP supplier—are maintaining high production rates, contributing to an oversupplied market. A trader expressed concern that if production levels persist, producers might be compelled to shut down in early 2025 to rebalance supply and demand.