Manifold Factors Forestall Indonesia PP Prices From Falling, Players Concerned About Demand Outlook
- Local PP offers moved on a mixed directions, while import offers remain skyrocketed
- Indonesia’s Pertamina halted production at its PP plant since last Friday, June 26
- Players foresee upward adjustment for local PP prices on the back of several reasons
As SSESSMENTS.COM noted, manifold factors forestall Indonesia PP prices from falling in the days to come, yet players are concerned about demand outlook. On July 1, the leading Indonesian polyolefins producer announced a second price list for this week with an upward adjustment particularly for PP Homopolymer and Copolymer grades by IDR280,000-290,000/ton ($19-20/ton) compared to the price list announced on June 29. Meanwhile, a trader decided to maintain stable offers for local PP Homo Injection and PP Homo Raffia and managed to sell some volume for both cargoes at IDR15,200,000/ton ($1,054/ton) on cash, FD Indonesia basis and excluding 10% VAT, or IDR100,000/ton ($7/ton) lower than the initial offer levels. On the contrary, another trader lowered their offers for local PP Homo Injection and PP Homo Raffia by IDR200,000/ton ($14/ton), citing that their offers were higher compared to other traders. Meanwhile, offers for PP Homo Injection and PP Homo Raffia from another local PP producer in the country via traders slightly increased by IDR100,000/ton ($7/ton). For localized cargoes, offers for PP Homo Film of Thailand origin moved higher by IDR200,000/ton ($14/ton). All price changes are on a weekly interval.
For imports, a converter received offers for Middle Eastern PP Homo Raffia at around $100-120/ton higher on month-on-month comparison. On the other side, a trader informed that import offers for PP Homo Raffia from a few Saudi producers went up between $10-15/ton. Whereas from the Asian suppliers, import offers for PP Block Copolymer of South Korea and Singapore origin both increased by $20/ton. All compared to last week’s level. In response to the current offers, most converters think that the overall import PP offers to Indonesia are not workable considering the insanely high prices, long shipment time, as well as currency fluctuations. Moreover, some converters also told SSESSMENTS.COM that procuring import materials is rather risky, let alone in bulk, owing to the blurry market outlook.
Compared to last week, demand for PP in Indonesia’s domestic market reported stagnant. No improvement observed as most buyers continue buying on a hand-to-mouth basis. Besides, demand for finished products has yet to show any significant improvement; which leads to sufficient inventory on the converters’ end particularly with digestion of raw materials is slow. In the production sector, SSESSMENTS.COM noted that most converters reported running production at around 60-80% from the normal rate this week. On the supply front, the overall supply for PP on producers’ end is quite ample this week, but the same cannot be described for traders. On the plant news, Indonesia’s Pertamina has halted production at its PP plant since last Friday, June 26, due to an outage stemming from the issues at its Fluid Catalytic Cracking Unit (FCCU). The plant with a capacity of 45,000 tons/year will be shut for 12 days and is expected to resume production on July 8. Due to the maintenance shutdown, the company will cut the allocation for contract customers for about 2,000 tons, and no spot offers are available at the moment.
For the outlook, the majority of market players contacted by SSESSMENTS.COM believe that local PP prices will remain stable or moved higher between IDR100,000-300,000/ton ($7-21/ton) from the current levels as supported by several factors such as currency exchanges, firmer feedstocks prices as well as uptrend in the international price trend. However, players are rather worried about the demand outlook in the days to come amid the anticipation of a second wave of Coronavirus outbreak.
