Indonesia’s PP, PE markets tumble from record highs on import-duty cuts, more downside in sight

Indonesia’s PP and PE markets have entered a clear correction phase after weeks of aggressive gains, with both import and domestic segments reversing course amid shifting fundamentals. Import prices have softened in line with the broader regional downturn, while domestic prices have plunged sharply following consecutive rounds of deep cuts from a major local producer.

ChemOrbis Price Index data show that local PP prices surged by 100% from pre-war levels to their peak, while PE grades climbed even higher, rising by 112–113% over the same period to reach unprecedented levels. However, within just two weeks, local PP prices have fallen by 24% from their peak, while PE grades have dropped by 16–17%, highlighting the speed and magnitude of the downturn.

The ongoing weak trend has room to extend, as a combination of policy changes, recovering domestic supply, and persistently weak demand is likely to outweigh earlier bullish drivers tied to feedstock disruptions and logistical constraints. While cost-side volatility linked to Middle Eastern tensions may continue to lend intermittent support, the market narrative is increasingly dominated by affordability concerns and intensifying competition.

Sharp surges followed by swift downward recalibration

Import PP and PE prices have followed a stable-to-softer trend since mid-April, falling by $25-75/ton, with LLDPE film recording the steepest declines. The correction reflects a transition from supply-driven tightness to a demand-driven environment, where cautious buying sentiment and buyers’ resistance have curbed sellers’ pricing power.

Domestic markets, however, have witnessed far more dramatic declines after repeated massive hikes that previously pushed PP and PE prices into uncharted territory. The ongoing downturn was triggered by relentless downward revisions from the major local producer since late April.

Within just over a week, the producer announced five rounds of price cuts totaling IDR10,020,000/ton ($577/ton) for homo-PP raffia and inj., IDR8,110,000/ton ($467/ton) for LLDPE film, and IDR8,090,000/ton ($466/ton) for HDPE film. Other PE and PP grades also posted steep losses of IDR5,920,000-9,060,000/ton ($341-522/ton), underscoring the bearishness inside the country.


Bearish momentum builds on series of cooling factors

Despite recent retreats, Indonesia’s polyolefin markets continue to face a series of mounting downward pressures, suggesting that the current correction may not have fully run its course.

Policy shift amplifies downside via import pressure

The government’s temporary elimination of import duties on key plastic resins, including PP, HDPE, and LLDPE, for a six-month period is set to reshape market dynamics. While the policy aims to stabilize supply and curb inflation in downstream sectors such as packaging and food, it also opens the door for increased inflows, particularly from non-ASEAN origins.

ChemOrbis Stats Wizard indicates that in the first two months of 2026, Indonesia sourced over 57% of its PP imports and 65% of its PE imports from ASEAN countries consisting of Singapore, Thailand, Malaysia, and Vietnam. These volumes already benefited from zero tariffs under the ASEAN Trade in Goods Agreement (ATIGA), meaning the new policy will have limited impact on the large volume of intra-regional flows.

However, the more significant effect lies in imports from key non-ASEAN suppliers such as Saudi Arabia, the UAE, the US, China, and South Korea, which previously faced duties of 5-15%. The removal of these tariffs is expected to encourage import flow at more competitive levels and ultimately exert downward pressure on domestic prices.

Chandra Asri rushes to lift force majeure, restoring domestic availability

Additional pressure stems from improving domestic supply conditions following the cessation of force majeure by PT Chandra Asri, who was one of the first producers announcing force majeures when the Middle Eastern war erupted. The producer’s decision to resume normal PP and PE deliveries marks a turning point after weeks of disruption caused by feedstock constraints linked to geopolitical tensions and logistical bottlenecks in the Strait of Hormuz.

The company has restored operational stability by diversifying feedstock sourcing, including increased procurement from the US and optimization of its Singapore-based facilities. Although these measures came with higher costs and longer lead times, they have enabled the producer to normalize output and rebuild supply reliability. The prioritization of ethylene allocation for downstream polymer production is also expected to support steady PP and PE availability in the domestic market.

As supply gradually improves, the earlier tightness that fueled price surges is fading. The re-entry of consistent domestic volumes, combined with potentially higher import arrivals, could intensify competition among sellers, reinforcing the current downward trajectory.

Demand weakness adds another layer of pressure

On the demand side, conditions remain subdued, limiting the market’s ability to absorb additional supply. Market participants consistently report sluggish order inflows, with converters struggling to pass on elevated raw material costs to end-users. Even after recent price corrections, many buyers continue to view current levels as relatively high compared to downstream affordability.

Converters noted that while some opportunistic purchases have emerged following discounts, buying activity remains cautious and largely hand-to-mouth. Traders echoed similar sentiments, with one of them saying, “Demand is muted, making it difficult to conclude deals despite recent price declines. Buyers report low order intake and continue to push for discounts, while purchasing volumes remain limited.”

The lingering demand stagnation, accompanied by policy-induced import competition and normalized domestic output, suggests that Indonesia’s PP and PE markets may face continued downward adjustments before reaching a floor. As a local player puts it, “Prices have declined sharply due to a lack of demand support. We expect further reductions, as import duty cuts possibly lead to more attractive import offers, forcing local sellers to cut prices to remain competitive.”