Indonesia’s PP and PE Markets Rise Further as High Costs Pressure Converters

Indonesia’s domestic PE market has maintained its upward trend since mid-July, while PP prices have continued their recovery over the past five weeks following a sharp correction in early August. The latest gains have been driven mainly by stronger upstream costs. Crude futures have remained above $105/bbl, while regional spot ethylene and propylene prices have reached nearly four-month highs, providing continued cost support for polyolefins.

Despite the sustained price increases, demand has not improved at the same pace. Although some downstream orders have shown signs of recovery and availability is not particularly ample, overall demand remains sluggish. Sellers continue to face elevated production and replacement costs, while buyers remain cautious about building inventories at higher price levels.

Prices Recover, but Remain Below April Peaks

Apart from the PP correction in early August, Indonesia’s PP and PE markets have generally moved higher over the past two months. By mid-September, homo-PP raffia prices had reached their highest level since early May, while HDPE film and LLDPE film prices climbed to more than three-month highs, according to the ChemOrbis Price Index.

However, prices remain significantly below the peaks recorded in mid-April during the first rally following the outbreak of the US-Iran war. Homo-PP raffia prices are still nearly 22% below their April peak, while HDPE film and LLDPE film remain more than 25% and around 27% lower, respectively.

The continued gains therefore represent a recovery from the earlier decline rather than a return to April’s exceptional levels. The current increase has also been more gradual and primarily cost-driven compared with the sharp repricing seen during the initial rally.

Local Producer Pauses After Aggressive Increases

A major Indonesian producer implemented four PE price increases and three PP hikes over the past week. Cumulative increases reached as much as IDR1,790,000/ton ($100/ton) for HDPE film, IDR1,970,000/ton ($111/ton) for LLDPE film, and IDR2,420,000/ton ($137/ton) for homo-PP raffia.

These successive adjustments contributed significantly to the stronger price gains recorded in the domestic PP and PE markets last week.

This week, however, the producer kept both its PP and PE offers unchanged. The rollover follows a series of substantial increases and indicates a pause in the pace of upward adjustments as buying interest remains limited. Consequently, Indonesia’s domestic polyolefin market has been relatively quiet so far this week.

High Resin Costs Challenge Converters

Downstream demand has shown some improvement, but the recovery remains limited and uneven. Several converters reported stable end-product demand, with some receiving slightly better orders for the current and following month. Nevertheless, order volumes remain below last year’s levels in some cases.

Material availability is present but not particularly abundant, leaving buyers with limited urgency to secure large quantities. One Jakarta-based converter said end-product demand was stable with a slight improvement in orders, but low factory inventories would only lead to need-based purchases because resin prices were already high.

The greater difficulty for converters is passing higher resin costs on to end users. Customers are resisting increases in finished-product prices, forcing converters to absorb part of the higher raw-material costs. Another converter reported normal finished-goods demand but said customer resistance was making it difficult to pass through rising resin expenses.

As a result, even relatively stable downstream orders have not translated into stronger resin purchasing. Converters are largely maintaining lean inventories and buying according to immediate requirements, leaving Indonesia’s PP and PE markets heavily dependent on continued upstream cost support.

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