Turkey's annual inflation eases to 47.09% in Nov; economic challenges persist in PE, PP markets

Turkey's annual inflation rate decreased to 47.09% in November from 48.58% in October, according to the latest data from the Turkish Statistical Institute released Dec. 3. Despite this slight easing, ongoing economic challenges continue to suppress demand in the polyethylene and polypropylene markets, leading to further price declines.

Month on month, inflation rose by 2.24% in November, down from a 2.97% increase in the previous month, indicating persistent yet slightly diminishing inflationary pressures. Specific sectors experienced varied changes: the category for carpets, rugs, and other floor coverings saw a 0.73% increase, while the home textile sector recorded a 0.69% rise compared with October.

The Central Bank of the Republic of Turkey maintained its benchmark interest rate at 50% on Nov. 21, citing ongoing inflation concerns and uncertainties in the disinflation process. The high interest rates have led to increased borrowing costs for businesses reliant on credit lines, further constraining operational financing.

The Turkish lira was last valued at 34.74 against the US dollar on Dec. 3. The currency's depreciation throughout 2024 has impacted consumer purchasing power and import costs, adding additional strain to market activity.

Market participants are cautious about the outlook, expecting challenges to persist into early 2025. High inflation and interest rates continue to dampen purchasing activity, and underlying economic issues such as consumer spending power and credit constraints need to be addressed to revive demand effectively.

Some traders expressed concerns that if current production levels persist amid weak demand, producers might be compelled to reduce output in early 2025 to rebalance supply and demand. "The situation is not well, demand is poor, it's not the time to buy, it's time to wait," said another trader.

The combination of persistent inflation, elevated borrowing costs, and previous currency fluctuations continues to pose significant challenges for the Turkish economy and its petrochemical sectors. Businesses are managing inventories carefully amid expectations of continued weak demand, with some anticipating that the market may not see significant improvement until the second half of 2025.

Platts, part of S&P Global Commodity Insights, assessed the CFR Turkey PP fiber spot price at $1,040/mt Dec. 3, unchanged on the day and up $10 on the week.

Platts assessed the CFR Turkey HDPE film grade spot price down $40/mt on the week at $970/mt Nov. 27.