Low-cost PP, PE gain favor as SE Asian buyers turn increasingly price-sensitive

Southeast Asian PP and PE markets have entered a softer phase, with prices moving sideways or trending lower as the recent upcycle loses momentum. Despite ongoing supply constraints, particularly the continued absence of Middle Eastern offers, market direction has been increasingly dictated by demand-side weakness and the growing availability of competitively priced Chinese and off-grade cargoes.

Buyers, faced with limited downstream support and persistently high price levels from traditional origins, have either shifted toward lower-cost alternatives or adopted a cautious wait-and-see stance. This shift in procurement behavior has become a defining feature of the current market, reinforcing downward pressure across both PP and PE segments.

Chinese cargoes reset market floor, widening gap with traditional origins

Chinese-origin cargoes continued to anchor the lower end of the market, particularly in key grades such as homo-PP raffia, LLDPE film, and HDPE film. These products remained the primary channels for Chinese exports into Southeast Asia, with aggressive pricing steadily resetting floors across the region.

Recent price movements highlighted the extent of this pressure from China. Homo-PP raffia broke below the $1300/ton threshold to reach $1255/ton CIF. HDPE film was offered at the $1300/ton CIF level, while coal-based LLDPE film moved under the $1200/ton mark, hitting as low as $1180/ton CIF.

Thus, the widening gap between Chinese cargoes and traditional origins became more obvious. Compared to Middle Eastern offers, discounts reached up to $255/ton for homo-PP raffia, $450/ton for HDPE film, and as much as $470/ton for LLDPE film. This disparity not only reinforced the competitiveness of Chinese material but also raised questions about the sustainability of elevated Middle Eastern pricing, especially in an environment marked by strong resistance given weak affordability and cautious buying sentiment.

In the meantime, the LDPE film market was relatively resilient due to limited competitive pressure from China. However, early signs of correction emerged. A major regional producer reportedly reduced LDPE film offers sharply from around $1950/ton CIF previously to $1650-1700/ton CIF, signaling a shift in pricing strategy. This adjustment reflected broader market realities, as muted demand and falling prices in other PE segments have begun to spill over into LDPE.

Price sensitivity reshapes purchasing behavior

With mainstream offers remaining largely above acceptable levels, buyers across Southeast Asia have increasingly prioritized cost efficiency over origin, turning to alternatives that better align with their margin constraints. Many of them have shown a clear and growing preference for lower-cost materials, especially Chinese-origin and off-grade cargoes.

Along with elevated resin prices, this shift has closely been tied to weak downstream demand and limited pricing power in end-use markets. As a result, most buyers have shifted to low-priced resin and purchased only on a need basis. Those with sufficient inventories have largely stayed on the sidelines, waiting for clearer price direction or deeper discounts.

At the same time, the availability of competitively priced alternatives has reinforced this behavior. Off-grade US cargoes have circulated at attractive levels of around the low-$1100s/ton for HDPE and LLDPE, while Chinese offers have remained significantly below mainstream origins. According to market sources, buyers have increasingly been willing to consider these options, particularly as some have faced tightening inventories but remained resistant to higher-priced material.

“Offers for Middle Eastern material remain too high for us to accept. We are now close to running out of inventory and may turn to Chinese material instead,” noted a converter. A trader based in Ho Chi Minh City echoed a similar strategy, “Chinese offers are significantly lower than those from the Middle East, so we may consider purchasing Chinese material instead.

In parallel, sellers have been forced to show greater flexibility, with negotiations becoming more extensive and discounts more common as they have sought to stimulate demand in an otherwise subdued market. “With demand remaining weak, some sellers are keen to move volumes and are offering additional discounts below prevailing market levels,” the above trader added.