Morning Briefing - 06 Jan. 2025

CommoPlast

Morning Briefing

06 January 2025

Brent: $76.51 (+ $0.58)

WTI: $73.96 (+ $0.83)

Naphtha CFR Japan: + $14

Ethylene CFR NEA: Stable

Ethylene CFR SEA: Stable

Propylene FOB Korea: + $10

Propylene CFR China: + $10

*Data represent closing prices of the previous trading day 

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The Chinese PET export and domestic markets began the year with unexpected firmness, with suppliers citing low inventories and an upturn in the crude and futures segments as justification for the hikes. This move caught market players off guard, as a series of bearish factors—including increased domestic production and sluggish year-end trade—had led to expectations of a stable-to-softer market. Unsurprisingly, buying responses were less-than-enthused.

Looking ahead, the sector will closely monitor whether suppliers can sustain this optimistic stance. With a shorter trading period in January and the recent launch of two PET bottle plants with a combined annual capacity of 1.25 million tons, a degree of destocking activity may become necessary—and this could prove challenging if buyers persist in resisting the firmer prices.

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A major producer in the domestic Indonesian PVC market has trimmed January shipment offers for a second time, reflecting sluggish demand amid regulatory unpredictability and a volatile exchange rate. The latest offers sit $20/ton below the previous revision—or $40 below last month's price list.

This price concession suggests that the recent decision to exclude non-luxury items from the Indonesian government’s 1% VAT hike has failed to reinvigorate purchasing activity. From the buyers' perspective, the regulatory relief likely came too late to stimulate trade, as expectations of a broader tax increase had already pulled forward restocking efforts.

Despite current challenges, market players have held to a degree of cautious optimism for early 2025’s demand outlook. In particular, purchasing activity in the food packaging sector may strengthen as buyers gear up for the Ramadan season, potentially providing a level of support to the domestic PVC market.

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