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SE Asia’s local PP, PE markets extend losses as demand weakness persists

by Merve Sezgün - msezgun@chemorbis.com
  • 18/07/2022 (02:57)
Local PP and PE markets in Southeast Asia have been mostly tracking a downward trajectory since around mid-March in the face of persistently weak demand.

Despite the fact that the continuing appreciation of the US dollar keep imports into the region uncompetitive, players say local demand fails to improve amid growing inflationary pressures and renewed Covid fears, coupled with plunging costs.

Vietnam

Data from ChemOrbis Price Index suggest that Vietnam’s local PP and PE markets have lost a total of 14-17% since the downward trend kicked off in around mid-March. Just last week, homo-PP raffia prices witnessed weekly losses of VND1,000,000-1,500,000/ton ($43-64/ton) while PE film grades were down in the range of VND500,000-1,000,000/ton ($21-43/ton).

Players noted that supply was comfortable amid subdued market activity.

A trader operating in the country explained, “Many traders built up inventories in May, expecting that prices would increase after China’s return from the lockdowns. However, it hasn’t been the case so far given the resurgence of Covid-19 infections. Now, traders are left with high inventories they purchased at higher prices. So, they prefer not to engage in fresh purchases for now. In the meantime, buyers stay sidelined and wait for prices to fall further.”

Indonesia

The weekly average of homo-PP raffia prices on FD Indonesia basis has plunged 27% since mid-March in line with the successive drops in a major domestic producer’s weekly price lists. ChemOrbis data also reveal that LLDPE and HDPE film prices with the same terms have recorded a total decrease of 18-19% over the same period.

A converter said, “PP and PE have seen a fresh round of decreases as ethylene and propylene prices have tumbled, and demand has weakened further. We prefer to adopt a wait and see stance before engaging in new deals as we think that additional price cuts are still possible.”

Thailand

In Thailand, local prices have lost 29% for homo-PP raffia, 26% for HDPE film, 24% for LLDPE film, and $19% for LDPE film since mid-March, according to data from ChemOrbis Price Index data.

Last week, a trader said local PP and PE prices dropped further by THB1000-2000/ton ($27-55/ton) due to lack of buying interest amid bearish sentiment. “Demand retreats in line with the rising number of fresh Covid-19 cases. Most buyers expect prices to continue the downward trend and they are not engaging in new purchases unless they are offered big discounts,” he said.

Philippines

Local LLDPE and HDPE film prices reveal an 18-21% decrease since mid-March based on average prices in ChemOrbis Price Index.

A Philippine converter said local prices continued to move lower last week in the face of falling olefin prices and persistently weak demand. “Local demand recovery has been battered by high inflation. Downstream production has been reduced due to the slow economic growth,” he added.

Malaysia

Malaysia’s local PP and PE prices on average have also slumped 11-18% over the same period, according to the ChemOrbis Price Index. HDPE and LLDPE prices have seen the largest decreases of 17-18% in this period.

A local PE converter said, “We try to use our existing inventory first as we believe that prices will drop further. Demand towards our end-products is still disappointing.”
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