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Indonesia’s polyolefin markets signal further weakness towards year-end

by Pınar Polat -
  • 11/12/2019 (03:35)
In Indonesia, both local and import polyolefin markets have remained on the soft side recently considering concerns over mounting supply and persistently bearish demand. These factors are also anticipated to keep the market under downward pressure during the final weeks of the year.

An Indonesian converter reported that offers they received for homo-PP raffia and PPBC inj. decreased by IDR800,000/ton ($57/ton) on the week and commented, “Local PP offers have lost further ground this week due to weak buying interest. We think that the market will welcome the year-end under the same conditions.”

Downward trajectory in place since August

Local PE prices have mostly been on a downward trend since late July this year, according to ChemOrbis Price Index. They are currently standing near their lowest since 2008. PP prices also turned down in August before witnessing a short-lived upturn in September. They cancelled all their gains in the following months to hit a 2-year-low.

Sluggish demand is to blame for weak PP, PE markets

Lower PP and PE prices across import and local markets are mainly attributed to thin buying interest, Indonesian players agree.

Players do not expect to see a demand recovery in any time soon as buyers maintain their wait-and-see stance in anticipation of further price reductions. Plus, trading activities are likely to slow further down in the weeks to come due to the year-end holidays.

Deep-sea US PE cargoes add to supply pressure

While inventory levels are already high across Southeast Asian markets, deep-sea US PE cargoes are adding increasing supply pressure on the market.

An Indonesian trader also reported that their offers for Saudi origin HDPE film and LLDPE film were down by $20/ton from late November. “PE prices have posted a new round of decreases this week. Apart from the lack of support from the demand-side, multi-origin offerings also weighed on prices, including cheap US cargoes,” he said.

Capacity expansions for PP in Indonesia

Ample overseas PP supply has been reinforcing concerns in Southeast Asia. Apart from this, major local producers in Indonesia including Chandra Asri and Polytama Propindo had been through capacity expansions in 2019, raising local PP availability by around 200,000 tons/year.

To track the most updated PP production news, please see PP Production News (For members only)

Local producer cuts HDPE, PP raffia, PPRC again

A local producer in Indonesia started this week with further price reductions of up to IDR420,000/ton ($30/ton) for HDPE, PPRC injection and homo-PP raffia and injection while implementing a small increase of IDR10,000/ton ($1/ton) on its offers for LLDPE, homo-PP film and PPBC injection.

The producer has been mostly applying a softer pricing on its PP and PE offers to its local market since early October.
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