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Surging Raw Material Costs and Subdued Demand Drag Down Turkish PSF Prices
Surging Raw Material Costs and Subdued Demand Drag Down Turkish PSF Prices

Surging Raw Material Costs and Subdued Demand Drag Down Turkish PSF Prices

  • 12-Dec-2023 3:13 PM
  • Journalist: Patricia Jose Perez

Despite Turkey's soaring raw material costs, November 2023 saw a decent decline in the Polyester Staple Fibre (PSF) market. The Turkish downstream textile market navigates a complex supply and demand landscape, with recent price fluctuations highlighting the industry's dynamic nature. While inflation initially drove up prices due to increased production costs, subdued demand from the textile sector triggered a price decline. However, the recent government intervention through increased tariffs may offer a lifeline for the domestic PSF market.

The downtrend in the market dynamics of PSF has been witnessed again during November amid subdued demand from the downstream textile industry. Previously, the Turkish PSF market experienced high prices due to prolonged inflation, significantly increasing production costs. This led to a decline in demand from the downstream textile industry, further exacerbated by the inflationary environment impacting consumer spending. However, a recent trend reversal during November 2023 has emerged, with PSF prices exhibiting a downward trajectory. This decline in PSF prices is primarily attributed to the subdued demand from the textile sector. The high inflation rates have discouraged consumers from purchasing textile products, leading to lower demand for PSF, the primary raw material. However, the Turkish government implemented a bold strategy to address this challenge and bolster the domestic textile industry. They raised tariffs by 30-100% on a wide range of imported textile products on 23rd November 2023. This move aims to protect local yarn and fabric manufacturers who were struggling to compete against cheaper imports.

On the economic front, the change in CPI in October 2023 is 3.43% compared to the previous month, further aggravating high inflationary pressure and dampening demand for commodities, including PSF. On the supply side, the high inflation rates have impacted production costs, especially PTA (Purified Terephthalic Acid), a potential feedstock for manufacturing PSF, limiting output and contributing to the price volatility observed in the market. Additionally, reliance on imported raw materials exposes the industry to external market fluctuations.

As per ChemAnalyst, with the beginning of 2024, the prices of PSF in Turkey are expected to surge amidst the implementation of government regulations that might increase the domestic supply in the domestic region. This intervention by the government is expected to have a positive impact on the PSF market in the coming months. The tariffs will incentivize domestic producers by making imported textiles less cost-competitive, potentially leading to increased demand for the downstream textile industry. This, in turn, could reverse the downward trend and stabilize or even raise PSF prices.

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