Oil Price Volatility Weighs on Buyer Confidence in Southeast Asia PP & PE Markets

Volatile crude oil prices have weakened buyer confidence across Southeast Asia's polypropylene (PP) and polyethylene (PE) markets, even as sellers continue to maintain firm pricing. After two weeks of strong cost-driven gains, fluctuations in energy markets have created uncertainty, leading many buyers to postpone fresh purchases while suppliers largely hold their offers steady.

Rather than triggering widespread price reductions, the recent swings in crude oil have mainly slowed trading activity, with both buyers and sellers waiting for a clearer market direction.

Suppliers Hold Prices Despite Oil Swings

Although crude oil and upstream feedstock prices softened from recent highs, most PP and PE suppliers chose not to lower their offers. Producers believe replacement costs remain elevated, while ongoing geopolitical uncertainty in the Middle East continues to support current pricing levels.

Instead of reacting to daily movements in crude oil, suppliers preferred to maintain stable offers or implement only modest increases. As a result, this week's price changes were smaller than those seen over the previous two weeks, but outright price cuts remained limited.

Buyers Adopt a Wait-and-Watch Strategy

In contrast, buyers became increasingly cautious as volatile energy markets made short-term price trends difficult to predict.

Most converters continued purchasing only enough material to meet immediate production needs, while traders delayed new deals in anticipation of clearer market signals. Many buyers also remained concerned that further weakness in crude oil could eventually translate into lower polymer prices.

Higher Prices Slow Trading Activity

The gap between firm seller expectations and cautious buyer sentiment resulted in weaker transaction volumes across the region.

In the PE market, several August offers faced strong resistance, forcing suppliers to conclude deals at lower levels than initially announced. However, even after these price adjustments, many buyers continued to stay away from the market, considering current import prices too high relative to downstream demand.

The PP market followed a similar trend. While import prices continued to edge higher, sluggish demand for finished products limited buyers' willingness to accept further increases, keeping most purchases limited to immediate requirements.

Domestic Markets Remain Relatively Strong

Some domestic markets continued to perform better than imports due to tighter local supply.

Vietnam's PP and PE markets remained supported by limited availability, while the Philippines also recorded further price gains. Meanwhile, Indonesia paused its recent series of weekly increases, Thailand saw reduced activity because of a public holiday, and Malaysia remained largely stable as participants waited for fresh producer offers.

Overall, market participants believe the main challenge has shifted from supply availability to buyer confidence. Until crude oil prices stabilize, trading activity across Southeast Asia's PP and PE markets is expected to remain cautious.

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