Vietnam local PP, PE markets stay on downtrend as demand still sluggish

Domestic prices of polyolefins in Vietnam have stayed on a downtrend since early February on lukewarm demand and adequate availability. Most players expect the downtrend to continue in the near term.

ChemOrbis Price Index data show the weekly averages of local homo-PP raffia and LDPE film prices falling by about 6% for a month since the first week of February. LLDPE and HDPE film prices have slid by 2-3% during the same period.



Local prices in Vietnam for the week ended March 10 were assessed at VND 29,500,000-30,000,000/ton FD Vietnam, cash inc VAT ($1132-1151/ton without VAT) for LDPE film, and at VND28,000,000-28,500,000/ton with the same terms ($1074-1093/ton without VAT) for both LLDPE and HDPE film. Meanwhile, PPH raffia prices were assessed in a VND27,500,000-28,000,000/ton FD Vietnam, cash inc VAT ($1054-1074/ton without VAT) range.

Converters run factories at reduced rates

Given the persistent weakness of demand for most PP and PE applications, many converters in Vietnam report that they continue to run their factories at reduced capacity.

An agricultural packaging converter said his factory is running at quite low rates of about 30-40% at the moment. “We don’t think prices can firm up, so we prefer to keep a low inventory and buy when we have some requirements,” he noted.

Another converter manufacturing PE packaging commented, “End product demand has yet to improve since the end of the Lunar New Year holidays. Compared with the same period last year, it is even worse. In order to be able to maintain our trading activities, we haven’t raised our end product prices despite high raw material costs. In the case of a price hike, our customers either cut down the order or begin looking for cheaper alternatives.”

Dong’s depreciation keeps buyers wary about imports

Converters of both PP and PE currently prefer local supplies to the US dollar-invoiced imports, as CIF prices have remained high, with the Vietnamese currency staying weak against the greenback.

In the week ended March 10, import prices for all origins were assessed at $1010-1110/ton for homo-PP raffia, at $1110-1150/ton for LDPE film, at $1080-1110/ton for HDPE film, and at $1060-1110/ton for LLDPE film, all on CIF Vietnam, cash basis.

“We prefer to buy from the local market as prices here can be lower than imports by up to $50/ton. But end-product demand isn’t too good. And, you can’t compare end-user prices in Vietnam with that of countries like China and India that enjoy favourable pricing and shipping costs. Our economy too is not in very good shape and our customers are back to buying only for immediate requirements,” said a converter. “In such a situation, it’ll be hard for PE and PP prices to rise,” he added.

LDPE demand weaker than LL and HD

A local trader said LDPE prices have been dropping faster than LL and HD prices, with LD being replaced by the other PE grades in different applications.

“Demand for all PE grades are weak, but the LDPE market is weaker than HD and LL,” he said. “PE demand after the Lunar New Year holidays haven’t been good, as most converters had replenished before the holidays. Most players are buying on a need-to basis only as they have ample stocks and are not in a hurry to replenish,” he added.

A converter said Vietnamese buyers are looking at import prices in the low-$1000/to levels. “Both local and import markets are slow. Most of us are in a wait-and-see mode,” he added.