Supply crunch pushed local PE market in Indonesia to multi month high levels

Domestic HDPE film market in Indonesia has been steadily firming up since late October 2017 with steep hike recorded in recent weeks thanks to persistent limited supply condition.

Domestic HDPE film offered based on FD Indonesia, cash equivalent currently at IDR20,100,000-21,000,000/ton ($1495 – 1565/ton) without VAT. Deals have been achieved at these levels with a trader said, “Market is very tight. There is no doubt that this condition will persist in the coming weeks with additional support from upstream costs.”

Traders in several areas in Indonesia are totally out of stock for HDPE film, from which buyers are forced to accept the continuous hike despite being unable to transfer the costs to end product prices. A HDPE bag maker added, “However, we only buy small quantity. Prices are too high, we are unable to accommodate.”

Supply for HDPE film might not ease anytime so soon, trader said, as both major domestic producers are not having sufficient allocation for spot market. “Our allocation is cut by 50 per cent compared to regular period. We are unable to provide quantity to regular customers,” a local trader said.

“We are still clearing the backlog at the moment, hence not having supply for spot buyers yet. Ethylene costs are too high and therefore we think there are still room for further increment in the coming days,” a local producer added.

Local LLDPE film market is firming up too with expectation that availability might soon tightened with Lotte Chemical Titan Nusantara delay restarting the unit after maintenance shutdown during mid-December 2017. It is still unclear at the moment on to when the company plans to bring its LLDPE line on-stream.