Changes In Indonesia PE Market Driven By Upstream Costs And Supply Tightness
- Price movements triggered by supply tightness
- Traditional trend in demand is no longer happening this year due to pandemic
- Pricing outlook still has higher ceiling to grasp
High monomer costs and supply tightness pushed changes in the Indonesia PE market this week. Market players informed SSESSMENTS.COM that local LLDPE Film C4 offers were at IDR13,800,000/ton ($973/ton) or IDR900,000/ton ($63/ton) higher compared to last week. This increase was considered by the market to be triggered by LLDPE plant outage at the leading Indonesian polyolefins producer. The producer experienced no disruptions in other production lines with distributors providing HDPE Film offers this week at IDR13,800,000/ton ($973/ton), increased by IDR300,000/ton ($21/ton) from last week. Meanwhile, localized Thailand cargoes went up by IDR200,000/ton ($14/ton) for HDPE Film, while LDPE Film moved higher by IDR600,000/ton ($42/ton) from last week. A significant upward adjustment also applied on localized cargoes from Malaysia with LLDPE Film C4 at IDR13,800,000/ton ($973/ton), surged by IDR700,000/ton ($49/ton) compared to last week.
From the import side, Thailand cargoes recorded an increase of $10/ton for HDPE grades and between $10-30/ton for LLDPE Film C4. Likewise, LDPE Film of the same origin surged between $10-40/ton while mLLDPE Film C6 gained $20/ton. All compared to last week’s levels. Market participants told SSESSMENTS.COM that import cargoes from Thailand perceived too high compared to other origins. For Middle Eastern cargoes, a local converter secured HDPE Film and LLDPE Film C4 at $850/ton, the same level as initial offers. In comparison to last week, the offers were $50-60/ton higher for LLDPE Film C4, while HDPE Film remained stable following the sell ideas that were floated. Meanwhile, July shipment offers for HDPE Film and LLDPE Film C4 from a Saudi producer via a global trading house increased by $100/ton and $90/ton respectively compared to June shipment offers. A global trading house reveals that US LLDPE Film C4 offers remained stable from last week at $830/ton. While deals for US LLDPE Film C4 cargoes from another seller captured at $800/ton.
Sales at producers’ end are still unstable at the current time. With supply being tight, there is a phenomenon that customers still show cold response to the remaining offers with some take the cargoes on little volume while remaining are hesitant and prefer not to buy. Talk specifically about end-products, domestic demand for single plastic bags, fashion plastic bags and bread plastic bags is gradually improving. On the other hand, demand for end-product from exports is moving slower as converters reported. Based on yearly trends, SSESSMENTS.COM noted the peak season for HDPE plastic bags takes place during Ramadan until Eid Al-Fitr celebrations (April-June) and year-end (October-December). The traditional trend shifted last year and market players doubted the traditional trend will repeat itself this year, considering the market situation is unclear amid pandemic issues. No peak showed on April-May sales and elements whether better sales this month counted as peak or spike. Market situation now depends on customers' cash flow, economic conditions and how the government handles coronavirus issues. However, most converters continue to run their plants at full rate. Moving into the supply sector, the LLDPE plant with an annual capacity of 400,000 tons owned by Chandra Asri Petrochemical which had just resumed operations on June 22 morning experienced an outage in the afternoon. The LLDPE plant is used to produce LLDPE Film C4 and LLDPE Roto 3840. The plant has been shut since before June 8, so the latest outage exhibited a serious problem, hence, the producer cancelled the restart-up until some time in the future.
Speaking of the outlook, market players are not sure how the price trend will be onward. However, looking at the firm feedstock prices and prolonged tightness in supply, the room for increases is still there according to market participants as quoted by SSESSMENTS.COM.
