Vietnam PP and PE Prices Reach Multi-Month Highs, but April Records Remain Out of Reach

Vietnam’s domestic PP and PE markets continued their broad upward movement in the week ending September 11, extending a rally that began in mid-July. The overall increase has remained intact despite some weakness in homo-PP and LDPE film prices during the first half of August.

Higher import replacement costs and rising energy prices have continued to give sellers room to push for increases. However, downstream demand remains fragile, with buyers largely purchasing only for immediate requirements and showing resistance toward higher offers.

Cost pressures became stronger during the week as renewed hostilities between the US and Iran increased concerns over energy supplies and transportation through the Strait of Hormuz. Brent futures moved above $107/bbl at Thursday’s settlement before falling 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.

These developments strengthened sellers’ confidence in maintaining higher prices. However, weak end-product demand and continued buyer resistance are limiting how much of the upstream cost increases can be passed through to the domestic market.

Domestic PP and PE Prices Reach Multi-Month Highs

After almost two months of gains, Vietnam’s domestic polyolefin prices have reached multi-month highs.

Homo-PP raffia

Current level: Highest since late May
Below April peak: ~10%

LDPE film

Current level: Highest since late June
Below April peak: ~19%

HDPE film

Current level: Around a 4-month high
Below April peak: ~6%

LLDPE film

Current level: Around a 4-month high
Below April peak: ~8%

Despite the recent rally, all four grades remain below their April peaks, when Vietnam’s PP and PE markets reached unprecedented levels before retreating.

The current market environment also differs considerably from the sharp price surge seen in March. During that period, rapidly rising costs were accompanied by tight supply and widespread concerns about further shortages, prompting buyers to secure material more urgently.

This time, although costs have again increased significantly and supply remains less than ample, market participants appear more accustomed to higher price levels. The absence of panic buying has kept purchases largely need-based, making buyers more resistant to repeated increases and reducing sellers’ ability to pass through cost rises as aggressively as during the March rally.

Low Inventories Provide Some Support

Overall consumption remains weak, but some buyers are carrying relatively low inventories, which could offer limited support to demand.

A converter in Ho Chi Minh City said its inventory had fallen significantly after waiting for prices to decline while the market continued rising since July. The converter indicated that replenishment may soon become necessary.

Another trader also reported very limited stocks, although high asking prices continued to restrict buying interest.

Low inventories have not yet resulted in a broad demand recovery. Most buyers continue to purchase on a hand-to-mouth basis, covering only immediate requirements.

One local trader said it had recently replenished some material and therefore had no plans for additional purchases at present. Another market participant similarly preferred to remain on the sidelines after securing enough stock for the time being.

High Prices Keep Buyers Cautious

Elevated offers remain the biggest barrier to stronger trading activity. Both traders and buyers described current domestic prices as difficult to accept.

Instead of following successive increases, some buyers are looking for cheaper cargoes from alternative origins, including Russia, the US and China.

The Ho Chi Minh City converter said rising local prices had reached levels it could no longer accept and that it was therefore prioritizing lower-priced material from these alternative origins.

Consequently, any replenishment resulting from low inventories may be directed toward competitively priced cargoes rather than automatically supporting higher domestic offers.

With end-user demand still weak amid unfavorable economic conditions and high resin costs, Vietnamese PP and PE buyers are expected to remain highly price-sensitive, limiting sellers’ ability to fully pass through the continued strength in upstream costs in the near term.

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