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Indonesian players have been witnessing tightened HDPE supply over the past couple of weeks as a major local producer switch production schedule to make more of LLDPE. This week, sellers are expecting the condition to further dampen as ethylene costs surge might force non-integrated producer to reduce operating rate.

A converter in central Java reported to have received less than 50% of contracted HDPE film quantity this week from a major local producer said, “Our supplier is taking longer time to deliver the remaining cargoes while prices in distribution market is very high. Our end product prices are not able to catch up, which might keep any further increment at check.”

In contrast, couple of other converters are considering to take additional cargoes concerning that market might extend the firming trend in the near term, especially when the traditional high demand season is just around the corner.      

A local producer said, “Ethylene costs increased beyond our expectation and at the moment we have yet to decide on whether to lower operating rate. Supply might fall if we move to protect margins. Our concern is that buyers might not accept additional hike as a result of stronger ethylene costs.”