Indonesian Market Players: Suppliers Pushed PE Cargoes At Attractive Prices To Boost Sales
- Domestic PE prices snapped nine-week winning streak amid a weak demand recovery
- The government’s move to phase out single-use plastics raised concerns among market players
- Supply in the certain region remains limited
Indonesian market players revealed to SSESSMENTS.COM that most producers and traders in the country have been aggressively pushing PE cargoes at attractive prices in a bid to gain market shares and to boost sales. As informed, Indonesia’s domestic PE market is now witnessing a reversal in price direction. According to the sources, PE prices in Indonesia appeared to be taking a breather after nine-straight weeks of gains. The pricing undertone in the domestic market turned bearish over the week, with most prices plummeting as slower economic growth checks demand. A massive slump in downstream demand has triggered the cut-throat competition within the industry as most suppliers are setting-off a wave of price cuts to clear out their stocks. As compared to the previous price list, the leading Indonesian polyolefins producer applied a price reduction of between IDR30,000-260,000/ton ($2-18/ton) on HDPE grades, and by IDR190,000/ton ($13/ton) on LLDPE Film C4. However, metallocene grade was the exception. Via traders, one of the local traders revised down offers twice this week; in total, local LLDPE Film C4 offers dropped by IDR550,000/ton ($38/ton), while offers for HDPE Film were lowered by IDR650,000/ton ($45/ton) all compared to last week’s levels. Echoing the same view, most traders quoted lower offers for localized cargoes to the domestic market this week, with price reductions ranging between IDR100,000-700,000/ton ($6.8-48/ton) on the week-on-week comparison. In contrast, the largest Indonesia’s local trading house initiated a slight price increase of IDR100,000/ton ($6.8/ton) for localized Southeast Asian HDPE Film, LDPE Film, and LLDPE Film C4 cargoes as compared to last week as supported by the depreciation of Indonesian Rupiah against the greenback. Sources revealed that most local suppliers are willing to entertain requests for discounts depending on the volume of purchases.
From the import market, most converters in Indonesia received import PE offers from several Middle Eastern producers, with prices remaining at high levels. A Saudi producer opted to raise offers for HDPE Film cargoes by $70/ton, while offers for LLDPE Film C4 adjusted up by $50/ton on a monthly basis. Similarly, an Emirati producer is also offering HDPE Film cargoes to Indonesia market at $50/ton higher than the offer level available in the previous week. In contrast, import LDPE Film and LLDPE Film C4 offers from a Qatari producer dropped between $10-40/ton, while offers for HDPE Film remain unchanged from two weeks earlier. As for Southeast Asia origin, a Thai producer has yet to release fresh PE offers to Indonesia market this week, but dropped hints at a possible price reduction of between $10-20/ton from last week. Sources pointed out that some buyers were turning to the domestic market to source the materials this week since current import offers are unattractive.
Indonesia’s PE market has largely been weighed by persistent bearish sentiment. Over the week, most buyers in Indonesia have turned more cautious and shun away from restocking activities as most spot PE prices remain at particularly high levels, coupled with sluggish demand from the end-user segment. The government’s move to phase out single-use plastics in some major cities has raised concerns among Indonesian market players about the growth of polymers demand, particularly for HDPE Film grade. However, some converters still see strong demand for food and beverage packaging materials. So far, production output at several manufacturers in Indonesia is less than normal capacity, around 50-70% from the normal output depending on their market shares. On the supply front, some local suppliers are still saddled with high inventory amid shrinking downstream demand. However, some sources mentioned that supply in some parts of the region, such as Medan, remains limited due to logistical issues.
Market participants in Indonesia voiced out to SSESSMENTS.COM that local and import PE prices will only fluctuate within a limited range, taking cues from firmer monomers costs. The slow demand growth will impede the possibility of price increase, considering not all industry sectors in Indonesia are moving in a positive direction.
