Sluggish demand exerts downward pressure on PE prices in SE Asia

Players in Southeast Asia’s PE market reported that prices are facing downward pressure from sluggish demand and that most done deals are being concluded with discounts from sellers’ initial price levels, as per ChemOrbis. With the year end only a few weeks away, demand is not expected to strengthen over the next few weeks, suggesting that sellers will remain under downward pressure even as they struggle to maintain acceptable operating margins in the face of firmer crude oil and ethylene feedstock costs. Import PE prices softened at the upper end of the ranges this week in the face of unresponsive demand. Done deals are generally concentrated towards the lower end of the range this week as buyers claim that most sellers are willing to negotiate in return for firm bids. A trader in Vietnam stated, “PE demand is relatively better than PP demand these days, but we still agreed to some discounts on our sales prices for Brazilian HDPE film as polymer demand is generally slow because of the ongoing reorganization of the banking system.” A converter in the packaging sector who reported concluding a deal for Middle Eastern HDPE film with a discount from their supplier’s initial price level commented, “We are not planning to make any additional purchases for now as demand for our end products is not all that encouraging.” Domestic PE prices moved significantly lower in Indonesia this week as supply began to loosen following the restart of Chandra Asri’s PE plant. Despite the drops seen in domestic prices, most converters are sticking to the sidelines for now, claiming that they are feeling satisfied with their stock levels at the moment. “Demand for our end products is sluggish during the year end period and we are in no rush to make fresh purchases,” commented a converter in the packaging sector. Sentiment is mixed in Malaysia’s domestic market as some players believe that local price increases may pass for both December and January owing to firmer upstream costs, while other players feel that sellers will not be able to secure any increases for December as demand is not supportive. Some December done deals were reported at or close to sellers’ initial prices this week, with one distributor claiming that they have nearly sold out their December stocks. Another distributor said that they have not been able to conclude any deals for December yet, adding, “Demand has not seen any improvement over the past month and most our customers are unwilling to accept higher prices for December.” In the Philippines, a plastic bag manufacturer stated that they managed to secure some locally-held LLDPE film with some price reductions from their supplier’s initial offer levels. “We are not interested in purchasing in large volumes these days as we are feeling comfortable with our stocks levels,” the buyer commented. “Local prices are mostly stable when compared with the past week but sellers are willing to negotiate with buyers placing firm bids.”