Indonesian players: Weak demand hurdled further PP hike

Over the past three weeks, homo-PP prices in Indonesia have been following the up trend on the back of healthy buying interest in nearby China market and also the depreciation of local currency. Buyers have initially accepted the increment, however, resistance build up to the extent that domestic traders are forced to sell much lower than official prices list.

This week, local market remains largely unchanged in term of both prices and demand condition; however, international suppliers are attempting to increase prices further due to limited availability. Major Thailand maker up adjusted prices by $20/ton for both homo-PP yarn and injection to Indonesia, touching $1220/ton CIF term. A buyer informed, “The supplier claimed limited supply due to the on-going maintenance shutdown, however, we could not afford making purchases at this level at the current end product business. Besides, local market offers similar prices for delivered term.”

Another Malaysian producer implemented $40/ton hike on their homo-PP cargoes to the country. Initial market respond is not so positive either. Meanwhile, a trader rollover their offers for Philippines homo-PP at $1140/ton CIF Indonesia said, “Last week we decided to cut our prices by $40/ton, yet the number of deals remain disappointed. Buyers are having comfortable supply and refused to build inventory at current exchange rate.”

In domestic market, another trader commented, “Demand is not there. Local market could not move any higher in the absence of buying interest. We expected correction to take place, especially in local market in the coming month.”

Propylene cost in Southeast Asia has plunged more than $80/ton last Friday amid downstream PP plants shutdown. This is expected to put even more pressure on the PP market in the near term.