Weak local demand pressures market prices in Vietnam

Vietnamese players reported this week seeing little improvement in term of demand in local market for both PP and PE, which encourages many traders to step up effort to smoothen sales process by giving discounts. This is in spite the fact that most international suppliers are holding firm on their offers for October delivery cargoes. Domestic buyers therefore are in confusion and loosing confidence in the near term outlook.

It appears that LLDPE film is loosing momentum in Vietnam after months of continuous increment due to lack of availability. Buyers are simply showing little interest in prices above the $1200/ton threshold. A trader received import offers for Middle Eastern LLDPE film at $1220-1230/ton CIF Vietnam, LC AS term explained, “We are selling in local market at only VND30,000,000-30,300,000/ton ($1220-1235/ton without VAT), FD Vietnam, cash term, which is similar to import offers at the moment. Even at that level, we fetch only a few deals. We plan to only replenish material from the import market if prices are below the $1200/ton threshold.”

In the PP sector, though the general prices are still stable week on week basis, however, traders with tight cash flow are offering larger than usual discount to speed up sales, creating chaos in local market. A buyer commented, “We were offered Middle Eastern homo-PP yarn at $1000/ton CIF Vietnam term, $20/ton lower than initial prices, yet we decided not to proceed any further. Local market is really slow. There is no unified trend here at the moment and traders are eager to deplete inventories. We think PP market has reached the peak and might have difficult time to move higher.”

Traders are expressing their disappointment towards the state of demand at the time market supposed to be active as the preparation for year end orders begins. Looking forward, players are not very optimistic about quarter 4 outlook, especially for PP as most cargoes are due to arrive by November.