Domestic al PP, PE sellers struggle to maintain premium over imports in Vietnam

Sellers active in the local PP and PE markets in Vietnam say that they are struggling to maintain a healthy premium over import prices, as buyers resist higher prices while overseas producers continue to implement increases, as per ChemOrbis. According to data from ChemOrbis Price Index, prices on an FD Vietnam basis are trading below their average level for H1-2014 for homo-PP, LDPE film and LLDPE film while HDPE film prices are defying the general trend to trade at a premium over imports close to their average for H1-2014. For H1-2014, local raffia prices on an FD basis have traded at an average premium of around US$35-50/ton over raffia prices on a CFR basis in Vietnam, according to data from ChemOrbis Price Index. However, the local market’s premium over imports has been below the US$35/ton threshold for the past six weeks and currently sits at around US$10/ton. A distributor said that they raised their prices by US$10-15/ton to keep pace with firming international trends. “Buyers are showing resistance to our increase attempts, but we are not willing to give any discounts on our new prices,” the distributor stated. Another distributor added, “It is currently a slow season in terms of PP demand in Vietnam and we do not expect to see any major change in the demand outlook over the short term. However, we have had to implement some price hikes in order to cover our higher replenishment costs.” In the LDPE film market, local prices have traded at an average premium of around US$60-110/ton over imports for H1-2014, although the premium has not exceeded its current level of around US$30/ton for the past five weeks. A converter purchasing LDPE and LLDPE film from the local market said that prices have firmed up owing to a stronger dollar in addition to higher transportation costs. “We are not planning to make any fresh purchases now as we are satisfied with our stock levels. Demand for our end products is normal these days,” the buyer reported. According to ChemOrbis, meanwhile, players reported that a similar situation is also in place in the country’s LLDPE film market. For the first six months of 2014, local LLDPE film prices carried a premium of around US$40-60/ton over import prices in Vietnam, although the premium has been below the US$40/ton threshold for the past five weeks. “Demand for LLDPE is not good these days and we are selling our materials with a loss,” complained a distributor. Another distributor added, “HDPE demand is better than LLDPE demand and HDPE prices are therefore higher in the local market. We believe that prices for both products will remain firm over the short term in line with stronger international trends.”