As SSESSMENTS.COM noted, the changes in production costs has urged a Thai PE producer to adjust export offers to the Indonesia market. This week, the latest offers for PE cargoes across all grades from the Thai producer were recorded stable from a week earlier, except for LLDPE Film C4. At the moment, the producer’s offers for LLDPE Film C4 are slightly higher by $5/ton from last week. The producer mentioned that the upward price adjustment was driven by the higher production costs stemming from the higher prices of ethylene and natural gas; basically, the producer’s plants are using ethane as feedstock. Responding to the offers, buyers’ feedback remains cold and most of them are expressing buy idea at below $700/ton for HDPE Film and LLDPE Film C4. Additionally, the producer’s offers for mLLDPE C6 are available at $890-900/ton on LC at sight, CIF Indonesia Main Port basis, but the volume is very limited.
Recently, many contract customers are asking to skip May delivery due to some reasons, including Ramadhan (fasting month) and sluggish demand. However, the producer personally thinks that the fasting month should not be the factor to skip this month’s orders as the local government has banned mudik (exodus) and moved the collective holiday for Eid Al-Fitr to the end of the year. On the production front, the producer is currently seeking ethylene cargoes. Citing that the producer prefers sourcing from other producers rather than producing, hence, the company could slash its operating rate. Further explained to SSESSMENTS.COM, the margin is still much better by buying ethylene since natural gas prices are high. In the meantime, the producer’s ethylene cracker is only running at 60% from the normal rate.
For offers in Rupiah denomination, the producer decided to follow the prices in the local market. However, for LLDPE Film C4, the producer is unable to sell below the initial offer level. While for HDPE Film and LDPE Film, the producer is offering at IDR11,220,000/ton ($743/ton) and IDR14,600,000/ton ($966/ton), respectively, but still received a lukewarm response from buyers. All offers are on cash, FD Indonesia basis and excluding 10% VAT. The source added to SSESSMENTS.COM that there is no impact from the shutdown at the leading Indonesian polyolefins producer’s PE plant that is expected to push demand. Most local traders are having abundant supply, especially for HDPE Film and LLDPE Film C4.
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