New Report Available: Turkey Petrochemicals Report Q3 2013

From: Fast Market Research, Inc.
Published: Tue Jul 02 2013


Amid a weakening external environment for Turkish manufactured goods and the Turkish domestic petrochemicals market are set to come under pressure, with BMI revising down its 2013 and 2014 growth forecasts on the back of weakening indicators and revelations that exports may not have been as strong in 2012 as hoped. Industrial growth declined to 3.3% in 2012 from 9.1% the previous year and is expected to fall to 0.9% in 2013. This will undermine petrochemicals output in the short-term, although BMI believes this will not damage local producer Petkim's ambitious investment programme.

Petkim reduced polymer prices in Q213 in response to low PE, PP and PVC demand and increasing offers of imported volumes. Turkey's PP market has been steadily moving lower since early March and the downward trend only gained pace in following weeks as buyers expected further decreases. Given the persistent lack of demand and retreating import prices, much lower levels continue to be speculated in the local market. The trends are in line with BMI's expectations, which were revised down in the previous quarter due to the decline in industrial growth.

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Through the investment programme, Petkim aims to double in size by 2018, with a new olefins complex and downstream units planned as part of its investment programme. Refinery construction at Aliaga began in October 2011 and should be completed by end-2014, meeting the company's entire naphtha feedstock requirement.

Over the past quarter, BMI has revised the following forecasts/views:

* An upturn is an outside possibility in H213 as credit conditions ease. However, any growth will be very modest due to a weak labour market causing a downward pressure on consumption of manufactured goods. Moreover, with the lira strengthening against the euro, a continuation of this trend could dampen European demand for Turkish manufactured goods exports more than expected. Slower than forecast growth in Europe would also weigh on Turkish exports. As such, BMI has revised down its industrial growth forecast for 2013 from 4.2% to just 0.9%. These factors provide downside risks to the petrochemicals industry as well as local demand.
* Turkey retains sixth place in BMI's Central and Eastern Europe Petrochemicals Risk/Reward Ratings this quarter with its score remaining unchanged at 48.7 points. Turkey is 1.8 points behind Slovakia and 3.6 points ahead of Romania.

Over the past quarter, BMI has revised the following forecasts/views:

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