Weak demand pressure local PP market in Indonesia

Indonesia market opens the new trading week on a stable to softer note as traders are stepping up effort to deplete homo-PP inventories amid stubborn sluggish demand condition.  This come as a surprise to many market players due to the fact that major local producer still rollover their price list while there is limited number of new offers available in the import ground.

A trader commented, “Local demand is very weak, especially for homo-PP yarn. Many other traders are giving discount to stimulate buying appetite, but it does not create any effect yet.”

Another trader offer domestically held SEA cargoes at $1100-1110/ton FD Indonesia, cash term, excluding VAT commented, “Local demand has not seen any improvement since after the Hari Raya in July. This is very depressing for local sellers and we are forced to take loses to deplete inventories in view of bearish outlook ahead.”

Falling local prices are pressurizing import ground as well, and in fact, prices above the $1100/ton CIF Indonesia threshold are facing stiff buyers resistance, sources said. A seller offers Southeast Asian homo-PP yarn cargoes at $1115/ton FD Indonesia, without VAT added, “Sentiment is very cold. Demand for yarn grade remains subdued in spite of production issues in the country. We think international suppliers might have difficult time in achieving premium prices over other regional market as China and Vietnam seems weakening.”

In another news, Chandra Asri is planning a month long maintenance shutdown at its 480,000 tons/year PP plant during November 2016. Players are hoping to see better trading condition as a result of this overhaul.