Import PE to Indonesia spiral down ahead of holiday

As reported earlier, major Saudi Arabia producer announced July shipment offers with up to $50/ton reduction month on month basis bringing latest offers to below $1100/ton threshold for the first time in several years. The producer’s price list stand at $1070/ton for HDPE film and $1080/ton for LLDPE film, all based on CIF Indonesia, LC AS term. Although the maker expressed intention to hold firm stance on the offers claiming the competitiveness, buyers are not very eager to make replenishment.

Today, a Kuwait producer opened new offers at $1100/ton for HDPE film and $1110/ton for LLDPE film, CIF Indonesia, LC AS term. “Yet, we were informed that prices are negotiable and some bid indications were given at $30-40/ton lower than list price. We think $1070-1080/ton is now the benchmark levels in Indonesia,” a buyer commented.

It appears that demand for PE in Indonesia is much weaker than other grades due to off-peak season for both agricultural film and flexible packaging. “Besides, we are not very confident in keeping high inventories ahead of the long Ramadan holidays, especially with the current market condition in China.”

Several other buyers expressed buy idea at $1050/ton for both HDPE and LLDPE film, CIF Indonesia, LC AS with a source added, “Our plant is off now and any negotiation would only take place after the holidays in early July. Ethylene costs is firming up, however, we don’t think PE market would gain any support as demand across Asia is weak.”

Low local prices are also a strong pressure point to import materials. According to CommoPlast data, the price gap between import and local HDPE and LLDPE film in Indonesia currently stand at $40-50/ton, which is not very attractive to buyers, especially for dutiable origins.