Vietnam’s local PP, PE markets surrender part of war-driven gains, remain far above pre-crisis levels

Vietnam’s domestic PP and PE markets have continued to correct lower after hitting all-time highs in early April, with prices retreating by 6-9% from their record peaks amid fading panic sentiment and persistently weak downstream demand.

Despite the recent declines, however, local polyolefin prices remain dramatically above pre-war levels after the market’s historic rally during the US-Israel-Iran conflict period. According to ChemOrbis Price Index data dating back to 2008, current LDPE, HDPE, LLDPE and homo-PP raffia prices are still 44-62% higher than levels seen before the war-driven rally accelerated.

Prices entered uncharted territory amid supply fears

Vietnam’s domestic PP and PE markets witnessed explosive gains throughout March and early April. Homo-PP raffia prices surged cumulatively by around 63% before peaking in late March, while PE film prices climbed to all-time highs in early April. HDPE and LLDPE film prices soared by roughly 55% and 60%, respectively, while LDPE film recorded the sharpest increase of approximately 73% due to tighter availability.

The rally was mainly driven by geopolitical tensions in the Middle East, which sharply boosted crude oil and feedstock costs while disrupting regional supply chains. Concerns surrounding production issues, rising freight costs, and the closure of the Strait of Hormuz created strong fears over the future availability of Middle Eastern cargoes.

Sellers raised offers aggressively to reflect higher replacement costs and supply risk premiums, while many buyers rushed to secure cargoes before prices increased further or supply tightened. Panic sentiment quickly spread across the market, even as actual demand remained weak.

A trader in Ho Chi Minh City remarked, “Very few sellers are quoting now. Those who still give prices are testing extremely high levels. Under the current circumstances, it has become very difficult to determine where the market truly stands.”

Another local trader added, “Local prices have surged to levels we have never seen before, but the number of actual offers is very limited. Many suppliers are holding back material while they wait for more clarity.”

Following the steep rally, the markets briefly plateaued at record highs before buying resistance gradually intensified, limiting sellers’ ability to pursue further increases and paving the way for the subsequent correction phase.

Cooling sentiment sparks correction phase

The local polyolefin markets started correcting from the second half of April as panic sentiment gradually eased, and weak demand fundamentals resurfaced. Homo-PP raffia prices dropped by nearly 7% before entering a three-week stagnation period, while PE film prices continued declining over the past four weeks. LDPE film prices fell by over 6%, HDPE film by around 7%, and LLDPE film by roughly 9%.

The correction was largely driven by cooling sentiment and deteriorating affordability. Buyers increasingly returned to hand-to-mouth purchasing strategies as concerns over immediate shortages faded. Meanwhile, sluggish downstream demand and limited acceptance from end-users prevented converters from fully passing on earlier cost increases, leading to growing resistance against elevated resin prices.

Importantly, the recent declines have only partially erased the earlier rally, with current prices still considered disconnected from underlying demand fundamentals by many market participants.

A trader described the current market dilemma, saying, “Buyers are currently reluctant to make purchases due to concerns that prices may decline further. However, delaying procurement could lead to supply shortages later on. Demand remains extremely weak, as end users have resisted accepting the latest price levels, leaving converters and traders hesitant to replenish inventories.”

Another trader distributing locally held Saudi Arabian cargoes said, “Demand remains weak, with buyers waiting for prices to decline further. We have nearly sold out our inventories but do not plan to replenish, as import prices remain high and shipment lead times are lengthy.”

Plus, a distributor based in Hai Phong noted that she preferred delaying replenishment due to fears of selling at a loss amid the ongoing downtrend and persistent demand weakness.

Weak demand continues to cap recovery prospects

Despite the recent correction, most market participants believe additional downside may still be possible as current prices remain elevated compared with actual downstream demand conditions. The comparatively modest declines following the earlier surge have failed to restore purchasing confidence, with many buyers continuing to scale down purchases while waiting for more attractive levels.

A local converter said, “Prices remain very high, even though they have eased compared to last month. We have enough raw material on hand, so we are monitoring the market and will only purchase if attractive discounts are offered.”

Meanwhile, a trader added, “We are willing to run out of material rather than replenish at current elevated price levels. As such, we are not under pressure to sell at all costs and prefer to adopt a wait-and-see approach for now.”

Although panic-driven supply concerns have largely eased, market participants increasingly believe the correction may have further room to run, as current price levels remain difficult to justify amid weak end-product demand and cautious replenishment activity. Until buying confidence improves or import costs decline more visibly, Vietnam’s domestic polyolefin markets are expected to remain under downward pressure despite staying well above their pre-rally levels.