Indonesia’s PET market slumps on persistently weak demand

Two major Chinese producers have announced import PET bottle offers to Indonesia market with $35/ton reduction from last week to $1095/ton CIF Indonesia, LC AS term. Falling upstream costs and persistently sluggish demand are blamed for the price reduction, sources said.

In fact, looking at the upstream MEG market, prices have been constantly falling since early September 2018 and for the first time in many months, MEG costs based on CFR China term fell below the $600/ton threshold this week, according to CommoPlast data.

Market players commented that the reduction in offers from Chinese suppliers are much expected since over the past several weeks, only this origin witness price increment while most other cargoes remain very much stable. 

“Chinese materials have been losing competitiveness. The market is facing intense competition from attractive local and Vietnamese cargoes,” a trader said. The source added that sales for Chinese material in the first quarter this year dropped more than 20% compared to last year.

Demand in Indonesia has not recovered after the General Election and the near term outlook remains very much bearish due to the fasting month. Apparently, local suppliers are stepping up the effort to deplete more cargoes at the moment. In fact, the latest price list from a local producer sees IDR500,000/ton ($35/ton) reduction from last week to IDR16,500,000/ton excluding VAT ($1163/ton), FD Indonesia, cash term.