Slightly late, but Indonesian PE market is picking up

The Indonesian PE market has been expecting a pick up in demand since early March, in line with the preparation for the Ramadan season from the flexible packaging sector. However, local suppliers have not been able to achieve satisfactory sale results until late last week.

Sentiment improved visibly and in spite of the fact that major local producers have been keeping price list unchanged, distribution market implemented an increased of IDR300,000-400,000/ton ($22-29/ton) to reflect better trading activities.   

“We have sold out most of the LLDPE film inventories and suspended all offering for this grade this week. Demand is coming back and we expect local producers to lift offers soon,” a local trader said, adding that domestic cargoes are underpriced at the moment. 

Another trader offers domestic LLDPE film at IDR18,300,000/ton ($1330/ton) without VAT, FD Indonesia, cash term said, “Sales for LLDPE film is strong, however, HDPE film buyers are still having concern over the new regulation on biodegradable plastic bags, hence more cautious about replenishment. Anyway, local HDPE film prices are high.”

Supply in the country might remain tight in the near term as a result of a change in focus among local producers to achieve better margins in the upstream markets, sources said. Besides, major PE exporters to Indonesia from Malaysia and Singapore are planning maintenance shutdown this second quarter. Yet, many buyers are not confident about the sustainability of the trend. “Once entering the fasting month, the market would slow down again as it is also the school holiday period. However, we had an opportunity to replenish comfortable inventories late last week, before prices firmed up,” a converter informed.