Southeast Asian producers announce price reductions on PP and PE offers

Southeast Asian producers have announced price reductions on their PP and PE offers in both the import and the local markets for the month of June. As per Chemorbis, producers pointed to persistently sluggish demand as the main reason behind the price reductions. In Malaysia, initial June offers for domestic PP and PE were announced this week with price declines of MYR200-240/ton (US$61-73/ton) for HDPE and LLDPE film, MYR270/ton (US$82/ton) for LDPE film, MYR140/ton (US$43/ton) for homo-PP and MYR200/ton (US$61/ton) for PPBC from the late May offer levels. Despite poor demand that has led to reduction in June offers, domestic producers are operating their plants at normal rates for the present. Converters in the country are mostly electing to remain on the sidelines for the moment, commenting that they prefer to wait to see new offers from other suppliers both foreign and domestic before making their purchasing decisions. One buyer receiving new offers for domestic LDPE film stated that they find the new offers to be too high to accept and that they are not planning to make any purchases from the domestic market at such levels. In Indonesia, domestic producers began the month by announcing price decreases of US$40-100/ton for HDPE film, US$80-110/ton for LLDPE film and US$40/ton for homo-PP, with poor demand and an absence of buying interest being cited as the main reasons for producers' price cuts. Distributors reported that they reduced their offers to match the new producer price level for HDPE and LLDPE film, while expressing a willingness to offer additional discounts of US$10-30/ton from the producer price level for homo-PP. Producers in the country expressed hope that demand in the local market might be picking up as they claim to have received a greater amount of price inquiries over the past few days. However, distributors feel less confident about the state of demand, which they say is still weak. Most buyers intend to wait for a while longer before making new purchases as they do not believe that local prices have reached the bottom yet. In the import market, a Thai producer reduced offers for homo-PP by US$30-50/ton at the start of the week while also cutting their offers for HDPE film and blow moulding by US$60-70/ton, pointing to lackluster demand and the need to compete against other import origins as the reasons for their price cuts. Even after the producer's price cut, their offers for homo-PP still stand US$50/ton higher than competing offers for Middle Eastern material while their offers for HDPE film are around US$20/ton higher than traders' offers for Middle Eastern materials. Traders offering Middle Eastern cargoes reported that they expect to see further price reductions over the short term as the bids they are receiving from converters are even lower than their current offer levels.