PolicyFriday, 8 May 2026·India
Indonesia’s PP and PE markets fall sharply after import duty cuts, further weakness expected
Indonesia’s polypropylene (PP) and polyethylene (PE) markets have started correcting after reaching record-high levels in recent weeks. Both import and domestic markets are now moving downward as supply conditions improve, government policy changes increase import competition, and demand remains weak across downstream industries.
Local PP prices had previously doubled compared to levels seen before the Middle East conflict, while PE grades climbed even higher, recording gains of more than 110% at their peak. However, the market has reversed rapidly over the last two weeks, with PP prices falling around 24% from peak levels and PE grades dropping by nearly 16–17%.
The sharp decline reflects changing market fundamentals. Earlier bullish sentiment driven by supply disruptions, feedstock concerns, and logistical issues has gradually faded, while affordability concerns and cautious buying behavior have become the dominant market drivers.
Import prices soften as regional sentiment weakens
Import PP and PE prices have been moving lower since mid-April, with declines ranging between $25–75/ton across different grades. LLDPE film experienced the steepest correction among the products.
The market has shifted from a supply-tight environment to a demand-driven one, where buyers remain hesitant and continue resisting higher offers. Weak purchasing interest has reduced sellers’ ability to maintain elevated pricing levels.
Domestic prices in Indonesia have seen even steeper corrections after aggressive hikes earlier pushed the market into unprecedented territory. The downturn accelerated after repeated price reductions from a major local producer beginning in late April.
Within a short period, the producer announced multiple rounds of cuts across PP and PE grades, resulting in substantial reductions for homo-PP raffia, injection grades, LLDPE film, HDPE film, and several other materials. The continuous revisions highlighted the growing bearishness inside the domestic market.
Import duty removal adds pressure on local sellers
One of the biggest factors weighing on the market is Indonesia’s decision to temporarily remove import duties on key plastic resins such as PP, HDPE, and LLDPE for six months.
The policy aims to improve supply availability and control inflation for downstream sectors including packaging and food industries. However, it is also expected to increase import competition, especially from non-ASEAN suppliers.
Previously, countries like Saudi Arabia, the UAE, the US, China, and South Korea faced import duties ranging from 5–15%. With these duties now removed, imported cargoes are expected to enter Indonesia at more competitive prices, increasing pressure on domestic producers and traders.
Although ASEAN suppliers already benefited from zero tariffs under existing regional agreements, the new policy could significantly boost inflows from other major exporting countries.
Domestic supply conditions continue improving
Additional downward pressure is coming from improving local supply availability after PT Chandra Asri lifted its force majeure on PP and PE deliveries.
The producer had earlier faced disruptions due to feedstock shortages and logistical complications linked to Middle East tensions and shipping issues around the Strait of Hormuz. However, the company has now stabilized operations by diversifying feedstock sourcing and increasing procurement from alternative regions such as the US.
The restoration of regular production and deliveries is gradually easing the tight supply conditions that previously supported sharp price increases. Market participants believe that the return of steady domestic output, combined with higher imports, will intensify competition and keep the market under pressure.
Weak demand limits market recovery
Demand conditions inside Indonesia remain sluggish, further complicating the market outlook. Converters continue struggling to pass higher raw material costs to end-users, while buying activity remains cautious even after recent discounts.
Many buyers still consider current price levels relatively expensive compared to downstream affordability. Most purchases are being made only to cover immediate requirements rather than for inventory building.
Traders also report slow order intake and limited transaction volumes, with buyers continuing to request additional discounts before concluding deals.
Market participants expect the bearish trend to continue in the near term as weak demand, improving domestic supply, and rising import competition combine to pressure prices further. Many local players believe additional reductions may still be necessary for the market to stabilize and regain buying interest.
Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.
Local PP prices had previously doubled compared to levels seen before the Middle East conflict, while PE grades climbed even higher, recording gains of more than 110% at their peak. However, the market has reversed rapidly over the last two weeks, with PP prices falling around 24% from peak levels and PE grades dropping by nearly 16–17%.
The sharp decline reflects changing market fundamentals. Earlier bullish sentiment driven by supply disruptions, feedstock concerns, and logistical issues has gradually faded, while affordability concerns and cautious buying behavior have become the dominant market drivers.
Import prices soften as regional sentiment weakens
Import PP and PE prices have been moving lower since mid-April, with declines ranging between $25–75/ton across different grades. LLDPE film experienced the steepest correction among the products.
The market has shifted from a supply-tight environment to a demand-driven one, where buyers remain hesitant and continue resisting higher offers. Weak purchasing interest has reduced sellers’ ability to maintain elevated pricing levels.
Domestic prices in Indonesia have seen even steeper corrections after aggressive hikes earlier pushed the market into unprecedented territory. The downturn accelerated after repeated price reductions from a major local producer beginning in late April.
Within a short period, the producer announced multiple rounds of cuts across PP and PE grades, resulting in substantial reductions for homo-PP raffia, injection grades, LLDPE film, HDPE film, and several other materials. The continuous revisions highlighted the growing bearishness inside the domestic market.
Import duty removal adds pressure on local sellers
One of the biggest factors weighing on the market is Indonesia’s decision to temporarily remove import duties on key plastic resins such as PP, HDPE, and LLDPE for six months.
The policy aims to improve supply availability and control inflation for downstream sectors including packaging and food industries. However, it is also expected to increase import competition, especially from non-ASEAN suppliers.
Previously, countries like Saudi Arabia, the UAE, the US, China, and South Korea faced import duties ranging from 5–15%. With these duties now removed, imported cargoes are expected to enter Indonesia at more competitive prices, increasing pressure on domestic producers and traders.
Although ASEAN suppliers already benefited from zero tariffs under existing regional agreements, the new policy could significantly boost inflows from other major exporting countries.
Domestic supply conditions continue improving
Additional downward pressure is coming from improving local supply availability after PT Chandra Asri lifted its force majeure on PP and PE deliveries.
The producer had earlier faced disruptions due to feedstock shortages and logistical complications linked to Middle East tensions and shipping issues around the Strait of Hormuz. However, the company has now stabilized operations by diversifying feedstock sourcing and increasing procurement from alternative regions such as the US.
The restoration of regular production and deliveries is gradually easing the tight supply conditions that previously supported sharp price increases. Market participants believe that the return of steady domestic output, combined with higher imports, will intensify competition and keep the market under pressure.
Weak demand limits market recovery
Demand conditions inside Indonesia remain sluggish, further complicating the market outlook. Converters continue struggling to pass higher raw material costs to end-users, while buying activity remains cautious even after recent discounts.
Many buyers still consider current price levels relatively expensive compared to downstream affordability. Most purchases are being made only to cover immediate requirements rather than for inventory building.
Traders also report slow order intake and limited transaction volumes, with buyers continuing to request additional discounts before concluding deals.
Market participants expect the bearish trend to continue in the near term as weak demand, improving domestic supply, and rising import competition combine to pressure prices further. Many local players believe additional reductions may still be necessary for the market to stabilize and regain buying interest.
Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.