Indonesia’s PP, PE rout deepens as domestic prices extend slide; import-duty cuts still await green light

Indonesia’s polyolefin markets have extended their downward correction into June, with local PP and PE prices falling further from the historic highs reached in mid-April. The latest declines came after a major domestic producer announced another round of reductions, underscoring the persistent bearish pressure stemming from weak demand and improving supply conditions.

Although market participants continue to monitor Indonesia’s proposal to remove import duties on key plastic resins, no official decision has been implemented yet. The plan remains under discussion, leaving the market without clear visibility on the timing and scope of any potential tariff changes.

According to ChemOrbis Price Index data, local PP and PE prices remain significantly above pre-war levels despite the sharp correction seen over the past six weeks. However, the speed and scale of the declines indicate that the extraordinary rally triggered by supply disruptions and geopolitical concerns has largely unwound.

Major producer extends downward revisions

According to traders, a major Indonesian producer announced fresh reductions for domestic PP and PE offers on June 1, marking the ninth consecutive round of stable-to-lower pricing since late April.

Weekly decreases in the PE segment reached IDR550,000/ton ($31/ton) for LLDPE injection, IDR590,000/ton ($33/ton) for LLDPE film, and IDR740,000/ton ($42/ton) for HDPE film.

Meanwhile, PP grades saw steeper adjustments. The producer cut offers by IDR2,870,000/ton ($161/ton) for PP block copolymer injection, IDR1,670,000/ton ($94/ton) for homo-PP film, IDR970,000/ton ($54/ton) for BOPP film, IDR840,000/ton ($47/ton) for PPRC injection, and IDR470,000/ton ($26/ton) for homo-PP raffia and injection grades.

The latest reductions add to an already lengthy series of price cuts that began shortly after local markets hit unprecedented highs in April.

Historic gains give way to sharp correction

ChemOrbis Price Index data reveal the extent of both the previous rally and the ongoing correction.

Among PP grades, local homo-PP raffia and injection prices reached an all-time high in mid-April. Since then, weekly average prices have fallen by a cumulative 34%. Even after this steep decline, prices remain 36% above levels seen during the week before the Middle Eastern conflict erupted in late February.

The correction has also intensified across PE grades. HDPE film prices, which likewise peaked at record highs in mid-April, have declined by 27% from their peak. Nevertheless, they are still 59% higher than pre-war levels.

LLDPE film has posted the deepest retracement among the key grades tracked. Prices have dropped by 29% from their mid-April peak, although they continue to stand 54% above levels recorded before the conflict.

The data suggest that while a significant portion of the war-driven gains has been erased, the market has not yet fully returned to pre-crisis pricing territory.

Import-duty proposal remains a key watchpoint

One of the most closely followed developments remains the government’s proposal to reduce or eliminate import duties on raw materials, including PP, HDPE and LLDPE.

However, despite widespread market discussions, the proposal has not yet been officially enacted. Market players continue to await a definitive announcement from authorities, with uncertainty surrounding both the implementation timeline and the final structure of the measure.

If approved, the proposal is expected to improve the competitiveness of imports from major non-ASEAN suppliers such as Saudi Arabia, the UAE, the US, China and South Korea, potentially increasing import availability and intensifying competition in the domestic market.

For now, however, the anticipated policy shift remains a future possibility rather than an active market driver.

Supply outlook improves despite lingering HDPE constraints

Beyond the tariff debate, market fundamentals remain largely bearish.

Domestic supply conditions have improved following the normalization of deliveries by PT Chandra Asri after earlier disruptions linked to feedstock constraints and logistical issues. The return of more consistent domestic availability has eased the tightness that previously fueled aggressive price increases.

Still, supply conditions have not fully normalized across all grades. While Lotte Chemical Titan Nusantara’s LLDPE unit was expected to resume operations in mid-May, its HDPE plant remains under a scheduled 30-day shutdown. As a result, HDPE availability may remain relatively tighter than other polyolefin grades despite the broader easing in market conditions.

At the same time, demand remains lackluster. Converters continue to report weak order intake and difficulties passing raw material costs through to end-users. Purchasing activity is largely limited to immediate requirements, while buyers maintain a cautious stance despite the recent correction.

With overall supply conditions improving, demand showing little sign of meaningful recovery, and the prospect of future import-duty reductions still hanging over the market, participants increasingly expect additional downward adjustments in the near term.

More downside cannot be ruled out

The combination of improving domestic availability, cautious buying interest and the possibility of future import-duty reductions continues to weigh on sentiment, although lingering HDPE supply constraints may help cushion losses in that particular segment.

Although prices have already retreated substantially from their historic peaks, many players believe the market has yet to find a definitive floor. Unless demand improves materially or new supply disruptions emerge, Indonesia’s PP and PE markets may remain exposed to further downside pressure in the weeks ahead.