Key Malaysian producer implements steep cuts on September PP, PE offers to Indonesia amidst regional downtrend

A leading Malaysian producer has announced significant reductions in its September shipment offers for PP and PE to Indonesia, reflecting the ongoing downtrend across the region. This latest adjustment marks the fourth consecutive month of price cuts for PP and the fifth for HDPE, underscoring the sustained bearish sentiment in the market. Despite these aggressive reductions, market responses remain tepid.

The producer’s latest price list and changes month on month are shown in the following table:

The Indonesian market has been on a persistent softening trajectory, influenced by various regional and global factors. Although a weakened US dollar has typically lent support to pricing, several ASEAN producers have capitulated to market pressures, offering deep discounts and finalizing deals for homo-PP below the $1,000/ton threshold.

“The Malaysian producer may be reluctant to implement such steep cuts, yet strong resistance from the market is inevitable,” remarked a trader.

The producer is reportedly operating at significantly reduced capacities due to margin compression, yet supply across Southeast Asia remains relatively stable. PrefChem and Long Son Petrochemical have stabilized their run rates following recent restarts, alleviating immediate concerns over PP availability in the region.

However, the situation for LDPE remains more complex. "LDPE supply is still constrained, which explains the more gradual price reductions in Indonesia. We are negotiating hard, aiming for at least $50/ton discounts," commented a buyer.

Earlier this week, the Malaysian producer agreed to conclude deals for LDPE film in Vietnam at $1230/ton CIF, a significant $110/ton reduction from initial offers. These transactions are likely to set a benchmark for Indonesian buyers in pricing negotiation.

Written by: Henny Sunarto

Edited by: Rochelle Nguyen