Indonesian players: Limited supply might push local homo-PP prices up

As one of the major domestic producers – Chandra Asri is planning for a twenty (20) days shutdown at is 480,000 tons/year PP unit in November 2016, together with several other international plants to be taken off-stream at the same period; Indonesian buyers are bringing up concerns that supply might be tightened. For this, buyers are showing their intention to replenish material before limited availability pushes prices up.

A converter informed, “We have only stocked up sufficient material till end of November 2016, and we planned to replenished two weeks more worth of inventories within these few days. International suppliers have lifted their prices with strong support from China market and domestic sellers might follow suite.”

Another buyer active in woven bags added, “Demand for our end product is weakening and number of orders might drop towards end of the year. We aware of these shutdown and chances that local prices might firm up are very high; however, we must consider our purchases very carefully to ensure smooth cash flow.” This could be the reason that local producers have yet to adjust their offers in nearly four weeks. However, sell ideas for homo-PP are with increases. Source from a local producer reported, “We have no more stock for homo-PP at the moment. Demand for homo-PP yarn is a little bit weak, but injection grade fetches more interest. We think prices should move higher with the support from international trend.”

Domestic homo-PP prices in Indonesia are reported at $1120-1150/ton FD Indonesia, cash term, excluding VAT. This is very similar to import offers from Southeast Asian producers, which is not in balance.