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As Lotte Chemical Titan forced to shut the whole petrochemical complex in Pasir Gudang, Johor as local utility company carry out upgrading work causing water supply disruption, many PP and PE cargoes concluded for April delivery have now been postponed to early May. Buyers in the country initially expecting stable to softer sentiment for the coming month are now changing their view on the near term outlook.

The shutdown has impacted domestic supply to a certain extent with LLDPE film and PP copolymers are especially tight, players said. Traders have responded to the situation by lifting prices for on hand cargoes. A distributor commented, “We have to postpone the delivery schedule for many PP and PE cargoes to local buyers to early May. Supply for PP copolymers is especially tight and we have implemented MYR400/ton ($90/ton) hike on these grades and currently monitoring market respond. May outlook therefore might not as bad as initially expect.”

A converter in PE packaging sector only received partial of his orders said, “The remaining quantity of our order might only come later this month or early May. Demand for our end product is pick up as Ramadan orders are coming in, hence we might need to source addition cargoes from open market. We think domestic suppliers might attempt to hold price stable to slightly firmer in the near term amid tightening supply condition.”

Other major PE producer in the country is also unable to meet spot orders for LLDPE film due to production switch, tightening the demand-supply balance. Players in the country have yet to show any sign of panic buying, however, some started to search for prompt cargoes in the distribution market.