Indonesia – Weekly PP Wrap Up - 8 July 2021

Date: 08 July 2021 

IMPORT MARKET

The import homo-PP offers to Indonesia continue to gallop higher this week regardless of the rapid falling sentiment in this market as the government implement emergency lockdown across the Java and Bali region to curb the rising number of COVID-19 infection.

South Korean cargoes jumped $15-30/ton from the previous week to $1255-1300/ton CIF Indonesia, while parcels originated from Saudi Arabia leap to $1240-1250/ton with the same term at the time of this report.

Transactions are thin. An increasing number of manufacturers started to raise concerns over the labour issues as a result of the strict movement control. “We have stepped out from the market after replenished the needed cargoes in the previous week. The current uptrend is very questionable considering the escalating COVID-19 situation in Southeast Asia. Anyway, once prices hit $1300/ton mark, we expect Chinese materials to resurface,” a manufacturer commented.  

In the PP block copolymer sector, offers remain on the stable to firmer trend, however the shutdown across the non-essential sectors of household and automobile industries seriously dampened demand.  

“We literally ignore the hike in South Korean cargoes. The market is too quiet. We expect most manufacturing plants to cut operating rates in the coming weeks due to the labour shortage,” another manufacturer added. The source received offers for South Korean PP block copolymer with $40/ton increased from last week.

LOCAL MARKET

It is very much understandable that the hikes in import offers are not welcomed in Indonesia, especially after a major local producer sharply slashed spot prices by IDR900,000/ton ($62/ton) from last week as the lockdown clouded the demand outlook.

In contrast, traders attempted to lift spot prices by IDR 100,000/ton for homo-PP yarn to IDR 19,500,000 – 19,600,000/ton ($1344 – 1351/ton) excluding VAT claiming heavy delay of import arrivals.

“Our Thailand parcels are delayed by one month while Malaysian cargoes needs about two months to reach. The demand is weak, but we are not having a lot of ready stocks on hand,” a key trading house reported.      

Market participants are not optimistic about the near term outlook. The outbreak within manufacturing plants might soon snowball into cashflow issues that further push buyers to the side-line.

OUTLOOK

Given the rapid deterioration in purchasing activities, both international and local suppliers might face heightened challenges in sustaining the current firming momentum in the coming week. Buyers portray no eagerness in making fresh buys fearing the lockdown might be longer than expected.