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Indonesia’s PE, PP markets remain strong despite softer sentiment in China

by Abdul Hadhi - ahadhi@chemorbis.com
  • 24/07/2019 (10:19)
PE and PP prices in Indonesia remain stable to firm in the local market even as the sentiment in China is turning cautious.Players attribute the relative strength of Indonesian PP, PE markets to the expectations of limited supply due to an upcoming maintenance.

Chandra Asri will be offline for a month

The maintenance at the Indonesian producer is expected to start by the end of July and the units are planned to be shut for around a month.

A source reported that the company is also planning debottlenecking at its PP and PE units, along with the scheduled maintenance activity.

Local HDPE film holds firmer, LLDPE remains stable

Local PE prices have been mostly flat so far this week. Data from ChemOrbis Price Index suggest that the weekly averages of HDPE film prices on FD Indonesia basis have witnessed a cumulative increase of $32/ton since the uptrend kicked off in late June. LLDPE prices, however, have not changed much.

Additional support was derived from a local producer maintaining its list prices for PE material at the start of the week.The producer has been keeping its weekly PE prices steady since early July.

PP shows stronger performance

The producer also kept its list prices for PP stable at the start of the week. After hiking its offers for homo PP and PPRC as of the second week of July, the producer has been maintaining its PP offers steady for the last two weeks.

In the local market, prices of PP material are mostly unchanged this week after registering a total increase of $45/ton on average starting from mid-June, according to ChemOrbis Price Index. Players argue that demand is improving from makers of end-products such as flexible packaging and woven bags used for agricultural purposes.

A source from a trading firm claims that supply has become limited for both local and imports, which has driven import prices up. A producer from Vietnam was heard to have increased offers by $50-60/ton CIF.

SE Asian producer announces Aug prices with rollovers to increases

A trader reported that a major Southeast Asian producer announced its August PP and PE prices to Indonesia yesterday with rollovers to increases when compared to July.

The producer lifted its offers by $40/ton for homo-PP yarn, injection, film and fibre while applying a $30/ton hike on PPBC injection. As for PE and other PP products, their new offers are stable from July.

China may limit upside

But spillover weak sentiment from China may limit further gains for PP.

China’s local PP market has turned softer due to lower PP futures on the Dalian Commodity Exchange, which lost around 1.5% from July 15 to July 19, weaker crude oil futures and higher local polyolefin supplies.

Fresh PP capacity due to come onstream in the second half of the year should keep up the pressure on prices by creating ample supply.

Similarly for PE, upside could be limited by volatile crude futures as well as ample US supplies. LLDPE has already failed to move higher so far, feeling a stronger pressure than PP and HDPE.

Imported material may become even cheaper with strengthening local currency, with a source in a trading firm saying there could be an increase in PE prices in dollar terms but the domestic currency equivalent may remain unchanged.
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