Indonesia – Weekly PE Wrap Up - 1 October 2020

Date: 01 October 2020 

IMPORT MARKET

There has been a mixed development in the import PE market by the week ending 1 October 2020. While dutiable cargoes continue to track the stable to firmer trend backed by the limited supply condition, a couple of Southeast Asian suppliers decided to step back on the prices by $10-20/ton week-on-week.

In both cases, transactions are thin and Indonesian buyers prefer to source the needed quantities from the local ground for better prices.

Thailand parcels see $10/ton reduction to $980/ton for HDPE film and $960/ton for LLDPE film, all based on CIF Indonesia, LC AS term. Meanwhile, the Philippines HDPE film is dealt at $20/ton below the price list at $990/ton with the same term.

“We hope our customers would become more active in making replenishment in the coming days as some manufacturers started to see better end product orders to quarter 4 compared to the previous quarter. At the current competitive local market, it is very challenging for import offers to record any additional increases,” an international trader commented.  

LOCAL MARKET

Sentiment in the domestic spot market remains sluggish and apparently, traders are offering larger discounts than the reductions observed in the official price list from a major domestic maker. Demand varied from each sector, according to market sources, though buyers generally remain very cautious about large purchases at the moment.

Customers in the agricultural film sector continue to enjoy stable demand conditions regardless of the worsening COVID-19 outbreak here in Indonesia. In the meantime, the construction film sector is suffering from the lack of demand due to the fact that many government projects have been put on hold to focus on the pandemic at the moment.

“Our supplier is willing to conclude LLDPE film below the IDR 15,000,000/ton excluding VAT, however, we are still considering because end product business is not strong, said, an LLDPE bag manufacturer added. 

Similarly, HDPE bag converters remain very reluctant to make large replenishment and tend to aggressively negotiate for steep discounts. This sector has been facing declining local demand since the government imposed a ban on single-use plastics bags in the capital city of Jakarta since July 2020. The recent reimposed COVID-19 lockdown further affected the end product orders.

A trader informed, “We are offering locally produced HDPE film cargoes at IDR14,800,000/ton excluding VAT ($997/ton), about IDR 200,000/ton ($13/ton) below the price list, yet our customers are still demanding for another $20/ton discounts. We are unable to meet the bid at the moment, especially the import market is so tight.”

OUTLOOK

It is expected that Indonesian buyers might return to secure additional quantities in the near term as most manufacturers are carrying minimum raw material stock at the moment. Yet, the squeezed profit margins might encourage manufacturers to be more selective when it comes to prices. Overseas suppliers would fall under pressure would local sellers decide to offer more discounts in the coming week.