Tariff uncertainty, new tax rules hit Vietnam’s polyolefin demand

A bearish tone continued to dominate Vietnam’s PP and PE markets in the first half of June, with local prices hitting multi-year lows and import prices mostly stable, according to ChemOrbis Price Index. Weak seasonal demand, ongoing uncertainty surrounding US tariffs, and the recent rollout of a new domestic tax policy have all eroded buyer confidence and market momentum. Many players have adopted a wait-and-see approach, deferring purchases in anticipation of clearer direction from both local and global developments.

Players sit on the fence to monitor markets

Buying activity remained lackluster across polyolefin markets, as converters and traders largely stayed sidelined. With sufficient stocks on hand and expectations of further price drops, many market players opted to delay purchases. Meanwhile, the presence of competitively priced Russian and Chinese materials, especially for homo-PP, added downward pressure on other origins rather than boosting buying enthusiasm.

“Offers are nearly the same as last week, but demand remains weak. Some Russian materials are much lower than market levels, so buyers who are price-focused may prefer those,” one trader observed. Another noted, “We still have material on hand, so we will keep staying on the sideline for now. The overall price trend seems stable to soft.”

Clarity on US tariff delay awaited

Uncertainty over the US’ reciprocal tariff policy on ASEAN goods, announced in April but delayed by three months, continues to cast a shadow on Vietnam’s polyolefin markets. With July approaching, many market players are holding off purchases while awaiting clarity on whether the US will proceed with the tariffs. This has been particularly concerning for export-driven converters, who face rising external risks.

A converter shared, “We still have existing stocks and don’t want to replenish. Demand is slowing due to the US tariff policies. Most players are waiting until the end of the month for the US decision on the three-month delay.” While crude oil prices have recently rebounded, players felt that external risks—like the potential return of US tariffs—were overriding any positive signals from upstream costs.

New tax policies further weigh on buying enthusiasm

Adding to the uncertainty is Vietnam’s recent tax reform, which aims to create a more transparent and fair system, especially targeting household businesses. Effective from June 1 under Decree No. 70/2025/ND-CP, all household businesses with annual revenues above VND1 billion (US$38,399) in select sectors must use e-invoices generated from cash registers. This marks the beginning of a transition away from the lump-sum tax regime, which will be fully eliminated by January 1, 2026.

While designed to improve fairness and transparency, the policy has had a tangible impact on the PP and PE markets. Several players noted that many small-scale businesses—particularly those previously operating under simplified tax schemes—have temporarily halted operations or scaled back activity as they assessed how to comply.

“The new tax rules are affecting everyone, even small businesses. Many of them are holding off on operations to wait for more guidance,” a Hanoi-based trader commented. A converter based in Ho Chi Minh City noted, “Before, small players didn’t need full paperwork. Now, they’re afraid of inspections, and some are even closing temporarily, making the market very quiet.”