Indonesia local PP market chilled as prices reach multi months high

Domestic offers for homo-PP in Indonesia has been steadily following the firming trend sine early July on the back of tightening supply and improved demand condition. Domestic homo-PP offers from one of the major local producers reached the highest level since beginning of the year, according to data combined by CommoPlast, causing massive resistance from the buyers’ side.

Local traders reported facing slower sales condition this week as buyers hold tight to the belief that a price correction is necessary. In fact, converters in the woven bag sector are encountering difficulties in transferring high raw material costs to end product prices, especially when a fertilizer tender has been canceled. A buyer commented, “We have been waiting on the side-line throughout this week with comfortable inventories on hand. Prices increase too quickly while demand is not catching up. We think market might witness small downward adjustment by mid-October.”

At the meantime, a major local trader is having slightly higher than usual homo-PP yarn inventory on hand, offering at $1300/ton FD Indonesia, cash term. The source said, “We are offering $10/ton discount on deals and sales results are not as good as they were in the previous week. Demand for injection grade is better and we think that market is nearing the peak now. We are concentrate on depleting inventory at the moment.”

Despite such sluggish condition, domestic producers are still planning to implement further hike in the coming week. “And we would monitor further development on the side-line before making any major decision,” another market source added,