Local PE market in Indonesia continues to strengthen, upsides is getting narrower

Joining the firming trend in local Indonesia PE market this week is LLDPE film, which has been constantly falling since beginning of September due to weaker than usual demand condition. Compared to last week, the average local LLDPE film based on FD Indonesia, cash equivalent has gained approximate $25/ton. Players believed that such recovery in market prices is mainly pulled by surging HDPE film since mid October.

Distribution market is supporting the move, too, unlike in the previous weeks with traders implemented as much as IDR400,000/ton ($30/ton) increased on the cargoes while refusing any further discounts. “Supply might tighten up with PT. Lotte Chemical Titan mulls over a shutdown in the coming week due to unaffordable feedstock. Our customers immediately withdraw to the sideline,” a trader informed. In fact, PT Lotte Chemical Titan Nusantara might shut its 200,000/year LLDPE line this 15 December for approximate three weeks.

The sustainability of the recent rebound, especially for LLDPE film is attracting many questions, as it seems that market is lacking of one of the most important support – demand. Converters in the flexible packaging sectors are not receiving sufficient end product orders. “We are cutting operating rate by 70% with high end-product inventories on hand,” a PE bag maker inform. The source has no plan to make fresh buy in the coming days.

Mulch film converters are having better situation and yet, many have already stocked up comfortably for the month. “We could wait on the side-line for now. The shutdown at PT Lotte Chemical Titan Nusantara might not impact on the general supply as much as expected given the presence of another producers. Market is soon entering the holiday season. Therefore, we are not seeing a possible big jumped in LLDPE film prices in days to come,” a source added.

HDPE film is retaining its strength over LLDPE film at a premium of more than $100/ton. Sentiment might soon chill with demand in China seems loosing momentum.