Northwest European acrylonitrile-styrene-butadiene and polystyrene producers are raising their competitiveness in order to retain market share in the fast growing Turkish market, market sources said this week.
European producers are offering ABS to Turkey at Eur1,550-1,650/mt CFR ($2,061-2,196/mt) in June, a Eur200-300/mt discount to NWE price levels of Eur1,750-1,950/mt FD NWE. Similarly, PS producers in Europe were offering June-delivered product at $1,900-1,920/mt CFR Turkey, a discount of Eur135-141/mt compared to the Eur1,570-1,580/mt price range they were selling to NWE customers.
ABS producers in particular shied away from raising prices into Turkey in June, given that Asian suppliers had lifted their offers by Eur50/mt this month, which they saw as an opportunity to regain market share in the country that was of increasing strategic importance.
"In terms of market size, Turkey has overtaken Italy," said one ABS producer. "And Italy is still in decline."
That producer said its first-quarter sales to Turkey had increased 27% from 22,000 mt/year to 28,000 mt/year, while sales to Italy averaged at around 25,000 mt/year.
"It is becoming the number two after Germany," said the producer.
Turkey's rate of economic growth slowed sharply to 2.2% in 2012, compared with an average 9% in 2010-2011, according to the Turkish statistics agency, on the back of weak domestic demand and spillover from the European debt crisis. But the country was still recording strong demand growth rates in polymers, sources said.
"Turkey really makes a difference, it is growing at a very high rate and extremely rapid growth with regards to ABS and we want to participate in that growth," said a producer.
Currently in Turkey, European suppliers hold around 20-40% of the market share for ABS while Asia holds the rest. Asian suppliers also hold a 20-30% market share in the European ABS market and typically at prices heavily discounted to European prices, creating a rising challenge to European production margins, industry observers said.
"Normally the gap [between Asian and European material] is Eur150/mt which makes it interesting [for buyers to switch], and we are keeping that in mind," said a separate producer.
South Korea's exports of ABS and PS to Turkey were poised to increase from May 1 as a new free trade agreement between the two countries comes into effect. The free trade agreement will ease a 6.5% import duty on ABS and PS from South Korea, and give the South Korean producers an advantage in the Turkish market.
According to statistics from the South Korean customs, Asian exports of ABS into Turkey have surged 61% in April to 5,448,775 mt in comparison to the end of 2012. Asian exports of PS to Turkey in April at 797,000 mt were also more than twice the volumes seen in December 2012.
According to Turkish importers, the removal of duties on South Korean polymers are not applied across the board. For PS and polyvinyl chloride, duties are merely reduced from 6.5% to 5.4%.
But the Europeans are now not the sole supplier with a competitive edge in terms of geographical proximity, Turkish sources said, after the startup of Egyptian Estyrenics' 200,000 mt/year PS plant at Alexandria at the end of 2012.
"Egyptian material is accepted by most of our customers, the price is lower than European PS and they have the same customs clearance with no duty," said a Turkish source. "Also shipping time is just three days."
In June, Egyptian PS suppliers had initially offered general purpose grade at around $1,900-1,930/mt CFR Turkey, but lowered it to $1,880/mt as Asian suppliers released new offers at $1,860-1,880/mt CFR Turkey. European suppliers in the meantime, were offering $1,910/mt CFR Turkey/North Africa/Israel for June-delivered GPPS.
