An Indonesian PE producer stated to SSESSMENTS.COM that the company has decided to cease offering HDPE Film and LLDPE Film C4 offers to the domestic market this week, citing a rising ethylene cost. As informed, the producer is facing sales pressure since a sharp rise in ethylene prices pushed production costs higher. Ethylene price in Southeast Asia region has relentlessly headed higher this month, hovering close to $800/ton-level on CFR basis, backed by stronger energy market and tight supply. As compared to early June, ethylene price on CFR Southeast Asia basis has increased by $110/ton, captured at $787-795/ton on June 23 settlement. Likewise, ethylene price on CFR Northeast Asia basis has breached above $800/ton-level.
The producer mentioned that this week, a large number of buyers is willing to make a contract agreement with the company for LLDPE Film C4 as the contract price is much lower than the market price, captured at IDR11,000,000/ton ($774/ton) on cash, FD Indonesia basis and excluding 10% VAT. Further added, spot LLDPE Film C4 offers in the domestic market are available at IDR13,800,000/ton ($972/ton) with the same payment and delivery terms. However, the producer will not accept the contract requests as the company has no quota left for the new contract agreement. “Market talks have it that the leading Indonesian polyolefins producer will only be able to meet contract volume at around 60% in Q3 2020. Meanwhile, Indonesia’s largest local trading house will not extend contract agreement with its customers as the company experienced losses,” the producer added to SSESSMENTS.COM.
