Southeast Asia PP & PE Stay Weak Despite Recovery in Oil Prices

The Southeast Asian PP and PE markets remained under pressure despite a recent rebound in crude oil prices triggered by renewed geopolitical tensions around the Strait of Hormuz. Fresh sanctions on Iranian oil exports, attacks on commercial vessels, and stronger crude prices briefly raised concerns over feedstock supply, but these developments had little impact on regional polyolefin markets.

Instead, abundant supply, intense competition among suppliers from multiple regions, and persistently weak downstream demand continued to dominate market sentiment. Import prices for both PP and PE extended their downward trend as buyers remained cautious and delayed purchases while waiting for clearer market direction.

Market Fundamentals Continue to Dominate

Although Brent crude climbed above $78/bbl during the week, most market participants viewed the recovery as insufficient to change the overall market outlook. While Asian propylene prices recorded their first weekly increase in nearly three months and ethylene prices stabilized, higher feedstock costs have yet to translate into stronger PP and PE prices.

Some suppliers temporarily withdrew offers after the rise in crude oil to reassess pricing strategies, but most continued offering competitive prices to secure sales in an oversupplied market.

Buyers Continue to Wait

Processors across Vietnam and Malaysia maintained a cautious purchasing strategy, buying only enough material to meet immediate production needs. Comfortable inventories, uncertainty over future price movements, and wide price differences among suppliers discouraged buyers from placing large-volume orders.

Rather than rushing to secure cargoes because of geopolitical concerns, most buyers preferred to wait for clearer signals from both energy markets and regional producers before making new purchasing decisions.

Strong Competition Keeps Prices Under Pressure

Supplier competition remained the biggest influence on pricing throughout the week.

Middle Eastern suppliers introduced some of the largest reductions in the PP market, lowering offers by as much as $100-150/ton to remain competitive against Chinese and South Korean material.

PE prices also continued to decline. LDPE film recorded the sharpest weekly correction, falling by around $100/ton, while LLDPE and HDPE film prices also weakened due to abundant supply from the Middle East, the United States, China, and Northeast Asia.

Market participants noted that producers continue prioritizing sales volumes and market share over profit margins as regional oversupply persists.

Most Conflict-Related Premium Has Faded

The market's muted response also reflects the fact that most of the price premium created during the earlier Middle East conflict has already disappeared.

Compared with levels before the conflict, Homo PP Raffia still trades about $150/ton higher, LDPE Film remains roughly $125/ton above earlier levels, and HDPE Film retains a premium of around $105/ton. LLDPE Film, however, is only about $60/ton above its pre-conflict level, indicating that most of its earlier gains have already been erased.

With much of the geopolitical premium already removed from prices, buyers are showing little urgency unless supply disruptions become more severe.

Outlook

Market participants believe the direction of crude oil prices and shipping conditions through the Strait of Hormuz will remain key factors in the coming weeks. However, unless geopolitical tensions significantly disrupt Middle Eastern exports or lead to a sustained rise in energy and freight costs, ample supply and weak demand are expected to keep Southeast Asia's PP and PE markets under pressure.

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