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Local PP, PE markets across SE Asia buffeted by weak demand

by Shibu Itty Kuttickal - sikuttickal@chemorbis.com
by Esra Ersöz - eersoz@chemorbis.com
  • 25/05/2022 (10:24)
Local PP and PE markets in Southeast Asia have moved south in the past two months, impinged by persistently weak demand, even though the appreciating US dollar continues to keep imports into the region uncompetitive.

Indonesia

Weekly domestic prices of polyolefins notified by an Indonesian producer in the past two months, for instance, have seen a 8-12% drop in HDPE and LLDPE film prices, and a 17-21% fall in homopolymer and copolymer PP prices.

“Local and regional demand has remained poor due to reduced downstream factory operations caused by higher inflation and oil prices since the outbreak of the Russia-Ukraine war,” an Indonesian converter said earlier in the week.

Vietnam

ChemOrbis Price Wizard suggests a 8-10% decrease in local PP and PE local prices in Vietnam in the last two months.

The local markets remain preferable for Vietnamese buyers as the USD equivalent of average local PP prices is at the same level with the import price on CIF basis not including duties. As can be seen from the graph below, local prices include all applicable cost but exclude VAT, while customs duties, clearance cost as well as the inland transportation have to be added on top of CIF values.

PP – Import – Local– Vietnam

As local prices stayed weak, import offers heard at the beginning of the current week showed a continuing slide. “We just received offers from Middle East suppliers. Prices are firm, compared to the previous week, but they are still lower by around $30-50 compared to last month. Sellers seem to want to raise prices, or keep prices firm but buyers are bidding low, buying less, or just stay in a wait-and-see mode,” a Vietnamese trader added.

Thailand

Thai local prices have slid by 8-17% over the same period. In the latest week, a Thai trader said prices had dropped by THB1000-2000/ton, compared to stable prices for PP and a drop of THB1000/ton for PE in the previous week.

“Demand is too weak because of slow requirements in the downstream markets. Demand is likely to remain weak in the coming couple of months because of the rainy season,” the trader added.

Malaysia

Local PP and PE prices have also slumped 6-13% in the past two months on average, according to ChemOrbis Price Index. HDPE and LLDPE prices have seen the largest decreases of 11-13% in this period.

A Malaysian converter said his company was not buying too much as prices could drop even further. “An official at a local producer has told me of its high current inventories. The producer is worried about a lack of space for its burgeoning stocks. Demand, as well as prices, are too low. They’re not able to export to China. Selling to Southeast Asia is also not too easy,” he said. “The producer could be incurring losses at the current prices,” he added.

Philippines

Local LLDPE and HDPE film prices reveal a 9-12% decrease since mid-April based on average prices in ChemOrbis Price Index.

A Philippine trader said local demand continued to be impacted by the demand slump in China, as well as the current higher oil price and inflationary environment.

Import prices to SE Asia remain under pressure

PP prices have been on a downward path since late March, with competitive offers emerging from South Korea, China, Russia and the Middle East. South Korean offers maintained their competitiveness on the low-ends of the market last week amid persistently weak demand and lower feedstock costs.

As for PE, import markets continued to stay softer as competitive offers continued from South Korea, Russia and the Middle East, besides Chinese re-exports, amid weak demand and lower feedstock costs.

Ethylene suffers similar losses

Feedstock ethylene prices have fallen by about 13% over the past two months to $1180/ton CFR China in the previous week, although the crude oil price fell only by about 4% during the same period.
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