Vietnam PP and PE Markets Extend Rally, Yet April Highs Remain Out of Reach

Vietnam’s domestic PP and PE markets continued to strengthen in the week ending September 11, extending the broad recovery that started in mid-July. Despite some weakness in homo-PP and LDPE film prices during the first half of August, firmer import replacement costs and higher energy prices continued to give sellers room to raise offers.

However, downstream demand remained fragile. Buyers largely purchased only for immediate requirements and continued to resist higher price levels.

Cost pressure increased further during the week as escalating US-Iran hostilities raised concerns over energy supply and transportation through the Strait of Hormuz. Brent futures moved above $107/bbl at Thursday’s settlement before slipping below $105/bbl during Friday’s session. Regional spot ethylene and propylene prices also increased by as much as $50/ton week on week, reaching their highest levels in around four months, according to ChemOrbis Price Wizard.

The stronger upstream environment improved sellers’ pricing confidence, but weak end-user demand and firm buyer resistance continued to restrict the extent to which higher costs could be passed through.

Domestic Prices Reach Multi-Month Highs

After nearly two months of gains, Vietnam’s domestic polyolefin prices reached multi-month highs. The weekly average for homo-PP raffia climbed to its highest level since late May.

In PE, the weekly average for LDPE film reached its highest point since late June, while HDPE film and LLDPE film moved to around four-month highs.

Current Price Position vs April Peak

Homo-PP Raffia
Current level: Highest since late May
Gap from April peak: ~10% lower

LDPE Film
Current level: Highest since late June
Gap from April peak: ~19% lower

HDPE Film
Current level: Around 4-month high
Gap from April peak: ~6% lower

LLDPE Film
Current level: Around 4-month high
Gap from April peak: ~8% lower

Despite the recent rally, PP and PE prices remain well below their April peaks. Current levels are approximately 10% lower for homo-PP raffia, 19% lower for LDPE film, 6% lower for HDPE film and 8% lower for LLDPE film.

The current market also differs considerably from the sharp price surge seen in March. At that time, rapidly rising costs coincided with tight supply and widespread concerns about further shortages, encouraging buyers to secure material more urgently.

Today, although upstream costs have again risen significantly and supply is not particularly ample, market participants appear more accustomed to elevated prices. The absence of panic buying has kept procurement largely need-based, making buyers more resistant to repeated increases and limiting sellers’ ability to pass through cost gains as aggressively as during the March rally.

Low Inventories Offer Only Limited Demand Support

Overall consumption remains weak, although some buyers are carrying relatively low inventories. This could provide some support if they are forced to replenish.

A converter in Ho Chi Minh City said it had been waiting for prices to decline, but continued increases since July had left its inventory at a low level, potentially requiring it to return to the market soon. Another trader also reported very limited stocks, although high offers continued to discourage purchases.

Low inventories, however, have not yet resulted in a broad recovery in demand. Buyers generally continue to follow a hand-to-mouth purchasing strategy, securing only what is required.

One local trader said it had recently replenished material and therefore had no immediate plans for further purchases. Another buyer similarly preferred to stay out of the market after securing enough stock for the time being.

Buyers Resist Higher Offers

High asking prices remained the main barrier to stronger trading activity. Traders and converters increasingly viewed current levels as too expensive, with some buyers looking for cheaper cargoes from alternative origins.

Lower-priced locally available material originating from Russia, the US and China was being considered as buyers sought more economical sourcing options.

A Ho Chi Minh City converter said local prices had continued to increase during the week and had reached levels that were difficult to accept, leading it to prioritize cheaper material from Russia, the US and China.

Consequently, replenishment demand from buyers with low inventories may not automatically translate into stronger support for higher domestic prices. Buyers are likely to favor the most competitively priced material when they return to the market.

With end-product demand still subdued amid challenging economic conditions and elevated resin costs, buyers are expected to remain highly price-sensitive. This could limit sellers’ ability to fully pass on the latest upstream cost increases in the near term.

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