Players’ in SE Asia’s local PE market hold divergent expectations

The past week saw local PE prices stable to firmer in Southeast Asia, amid firm ethylene costs and limited availability, as per ChemOrbis. Expectations are divided as to the outlook for May, as some players predict additional price increases driven by supply concerns while others are skeptical of the feasibility of any further price hikes, as spot naphtha prices continue to dip, while demand in the nearby Chinese market remains disappointing. Domestic PE prices for April were reported to be steady in Malaysia this week, although distributors within the country were divided as to the outlook for the month ahead. “We think that the market is balanced between firm feedstock costs and lackluster demand for now. As we do not expect any major change in the market dynamics next month, we believe that May PE prices will roll over from April.” Another distributor countered, “Local supply remains very tight and we are still working to clear our backorders for now. We believe that prices will remain firm in May as costs are still high and we feel that producers may implement further reductions on their operating rates in order to preserve their margins.” In Indonesia, domestic PE prices were steady to firm on the week as a domestic producer raised HDPE prices while leaving LLDPE prices unchanged on the week, as per ChemOrbis. “Our availability remains very limited and we are running our plant at high rates in order to catch up with our back orders,” commented a source at the producer. “Although supply is still limited, we are seeing greater resistance from buyers to higher prices and feel that the market will reach its peak level soon”. Buyers also reported limited supplies this week, although not all converters were in a rush to replenish. “We are not looking to buy for now as our stock levels are sufficient. Local PE supply remains limited, although the tightness in supply is not as severe as it was during the past few weeks,” reported a converter in the plastic bag and packaging sector. A buyer in the Philippines reported that local prices continued to firm up this week, adding that they expect to see additional price increases in the days to come. “Locally-held supply is very tight in the distribution market for now and distributors are not willing to give any discounts on their prices. We think that local prices will continue to rise in accordance with tight supply.” In Thailand, local PE prices held steady over the past week in spite of tight supply. The Songkran, or Thai New Year, holidays, which will officially start on April 13 have dampened buying interest in the country and there is not a clear expectation of the likely post-holiday trend. “We believe that prices will be stable to firmer after the holidays as supply is already limited and a domestic producer is planning to conduct a maintenance shutdown in May,” a distributor reported. Another distributor reported that they are not expecting any short term increases as they feel that supply is sufficient to meet the market’s needs. “PP supply is still tight but PE availability is sufficient for now and we are not hearing of any problems securing PE cargoes,” the distributor stated. In contrast to the stable trends prevailing in much of the region, prices were stable to slightly softer in Vietnam as a few players reported seeing some price reductions from the local market. “The import offers we received are mostly stable from last week, but we implemented some slight reductions on our prices as we want to speed up our sales,” a Vietnamese distributor reported. A converter manufacturing plastic fibres reported that they have not seen any price decreases yet while adding that they think prices will soften over the short term. “We think prices will be reduced over the near term as end demand is not good and many converters are willing to delay their purchases to secure lower prices.” Another converter seconded this comment, saying, “We plan to wait for a while longer before making our next purchases as we think that prices will fall by another $20/ton or so over the next few weeks.”