Softer import markets exert downward pressure on domestic prices in SE Asia

Sellers offering throughout Southeast Asian markets are complaining of stiff downward pressure from relatively cheaper import prices, resulting in falling prices or expectations of price declines in most of the region’s local polymer markets, as per Chemorbis. As SE Asian countries implement policies designed to lower trade barriers, local sellers are finding themselves less insulated from overseas competition amid rising oversupply from ongoing addition of capacities in Asia and the Middle East. The mounting oversupply problems in China and India, have left many traditional suppliers of these markets seeking new outlets for their material in Southeast Asia. The extent of China’s oversupply concerns can be gauged by the fact that attractive offers for PP raffia and LLDPE film of Chinese origin were reported in SEA’s import markets this week. In the PP market, local sellers in Malaysia and Vietnam conceded to further price reductions on their offers this week, while distributors elsewhere in the region predicted that prices would move lower in their own local markets over the near term. Malaysian producers implemented a second price reduction of MYR200/ton (US$61/ton) on their offers for homo-PP this week, bringing their cumulative June decreases to MYR340/ton (US$103/ton) from their late May offer levels. In Vietnam, offers for locally-held imports were reduced by US$16-24/ton on the week, bringing the total decrease amount seen on locally-held PP prices to US$87-101/ton since the last week of May. Despite significant decreases seen in these markets, converters throughout the region continue to remain aloof from the market in anticipation of further price declines over the days to come. In the PE market, sellers offering to their local markets also complained of facing difficulty concluding deals even after agreeing to significant price cuts. Malaysian producers implemented price cuts of MYR140-200/ton (US$42-61/ton) for HDPE film and MYR200/ton (US$61/ton) for LDPE film this week, bringing the cumulative June declines in domestic PE offers to Malaysia to MYR340-440/ton (US$103-133/ton) for HDPE film and to MYR470/ton (US$142/ton) for LDPE film. In Indonesia, domestic offers witnessed week over week declines of US$60-90/ton for LLDPE film and US$20-85/ton for HDPE film, with distributors in the country complaining that they are still having difficulty attracting buyers even after these price reductions. Offers for locally-held imports in Vietnam have recorded cumulative declines of US$125-139/ton for HDPE film, US$138-155/ton for LLDPE film and US$122-160/ton for LDPE film since the last week of May, with these decreases proving insufficient to lure converters back to the market. Weaker import prices have also put downward pressure on the region’s local PVC markets, where producers have had to agree to discounts from their initial June offer levels in order to wrap up their June business in the local market. June deals for domestic PVC have been settling with cumulative declines of US$40-60/ton from the late May offer levels in Indonesia, while the low end of the local offer range for Vietnamese PVC has shed US$67/ton from the end of the prior month. Although local offers in Malaysia and the Philippines have held steady after recording some decreases at the beginning of the month, few deals are being reported in these markets as buyers say that they are waiting for additional price cuts before returning to the market.
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