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Reduced supply sends Indonesia’s PE market to multi-month highs

by Pınar Polat -
  • 22/01/2020 (03:48)
Both local and import PE prices in Indonesia have been steadily firming up for the past three weeks due to reduced supply triggered by lower production rates at home coupled with maintenance shutdowns overseas. However, the demand side has been mostly unresponsive to this uptrend amid the imminent start of the Lunar New Year holiday.

Local LLDPE, HDPE film prices hit nearly 5-month high

According to ChemOrbis Price Index, the weekly averages of local LLDPE and HDPE film prices have recently reached to their highest levels since late August 2019.

On a side note, ChemOrbis data also suggest that local HDPE blow molding offers have also recently hit a three-month high on average.

4 separate PE hikes from a local producer since early Jan

After several weeks of stable to softer pricing in the fourth quarter of 2019, a local producer in Indonesia has been applying hikes on its PE offers since early January.

Taking the lead, the amount of total hikes issued by the producer for local LLDPE and HDPE film prices reached IDR1,810,000/ton ($132/ton) ever since the uptrend kicked off.

Hike attempts were mainly attributed to reduced availability in the local market that was reinforced by lower operating rates at a local producer’s plant.

Import PE follows a similar path

Apart from the bullishness in the local market, import prices have also been boosted by limited supply from overseas markets, with the weekly averages of HDPE and LLDPE film prices on CIF Indonesia basis hitting three and four-month high, respectively.

Several plants in the Middle East are undergoing maintenance shutdowns while upcoming turnarounds in Southeast Asia also added to supply pressure, pushing sellers to stand firm on their offers.

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

Ethylene prices boosted by supply issues as well

Spot ethylene prices in Asia have also firmed up recently on the back of supply tightness.

Despite volatile crude oil futures, this factor also gave an upper hand to PE sellers in addition to reduced PE availability.

Market response weak on approaching holiday across Asia

Sellers’ firmer stance has not been enough to prompt buying interest from PE converters. Several market players reported that the holiday mood has already been felt in the market due to the Lunar New Year which this year falls on January 25.

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