Indonesian players: LLDPE film demand remains weak despite tight availability

The Indonesia local market has been witnessing tight LLDPE film in the past couple of months due to the previous production issues at one of the major domestic plants and limited international availability. This has pushed local offers higher, however, demand remain weaker than expected.

Converters in the country are struggling to transfer higher raw material costs into end product prices, which in turn, many decided to replenish material hand to mouth basis instead of building stock. A trader commented, “Buying interest from the packaging sector is really weak, though we have to hold firm on our cargoes as availability in the spot market is still limited. We hope the preparation for the Ramadan season would stimulate trading activities in the coming month.”

It is reported that a major domestic producer has recovered from the previous technical glitches, however, still unable to fulfill orders from spot market at the moment. A producer said, “The PE market in Indonesia is weak in general and strongest factor support the firm trend is strong ethylene costs. Even with very few offers from international suppliers, buyers are not showing the urge to make replenishment.”

On the other side, there are some indications for better outlook in the coming days as converters from the agricultural film sector started seeing better end product orders. A manufacturer reported, “Our end product order increased approximate 10-20% this month, and we are now feeling more confident to buy larger quantity. We hope this condition would persist in the coming month.”

Domestic LLDPE film in Indonesia currently stands at IDR17,170,000-17,800,000/ton ($1287-1335/ton) without VAT, FD Indonesia.