Vietnam’s PP, PE Rally Slows as High Prices Trigger Buyer Caution

Vietnam’s polypropylene (PP) and polyethylene (PE) markets started October at firm levels, with both import and domestic prices reaching multi-month highs following a sustained rally that began in early July. However, the pace of the increases has weakened noticeably compared with September as subdued demand increasingly offsets strong cost support. After prices climbed sharply over the past three months, suppliers are facing greater resistance from buyers, making further price hikes more difficult despite firm upstream conditions.

According to the ChemOrbis Price Index, weekly average import prices for homo-PP raffia and injection grades reached their highest levels since early June in the week ending October 2. These grades had gained around 30% over nearly three months. Domestic homo-PP raffia prices recorded an even stronger increase of up to 37% during the same period, lifting the weekly average to a more than five-month high.

The PE market has also maintained a strong upward trend. Weekly average import prices for the three main film grades reached around four-month highs after increasing by approximately 27-31% over the past three months. Domestic PE prices rose even more sharply, with cumulative gains of around 21-41% since mid-July.

Among the major film grades, LDPE recorded the smallest increase, partly because it entered the recent rally from a relatively high starting point. Its weekly average nevertheless reached around a three-month high. HDPE and LLDPE film prices, meanwhile, climbed to their highest levels since late April, bringing their discounts from April’s record highs down to only around 1-4%.

High costs continue to support market

The Vietnamese market remained supported by elevated upstream costs and relatively tight availability. Crude oil futures were highly volatile during the past week amid changing developments related to the US-Iran conflict, but prices remained elevated overall. ChemOrbis Price Wizard data showed Brent crude averaging around $103/bbl during the week.

Regional spot propylene prices also moved higher, reaching approximately 4.5-month highs. Ethylene prices edged lower over the past three weeks but continued to remain at firm levels.

Freight costs provided additional support to the market, with traders reporting higher shipping expenses and difficulties in securing vessel space. Supply constraints among Middle Eastern producers also continued to strengthen seller confidence, particularly in the PE segment.

PP supply faced an additional temporary limitation as fresh Chinese offers were largely absent during China’s National Day holiday from October 1-7. This removed an important source of competitive material for Vietnamese buyers during a period of already elevated prices.

Weak demand limits further gains

Despite strong cost and supply support, weak downstream demand remained the main barrier to further price increases. The sharp rise in polymer prices over recent months has widened the gap between sellers’ cost requirements and buyers’ purchasing capacity.

Many buyers have therefore become more cautious about accepting additional increases. Some have delayed purchases, while others have shifted toward cheaper alternatives whenever production requirements allow. As a result, suppliers are finding it increasingly difficult to translate higher costs and tighter availability into additional price gains.

Saudi PE offers face growing resistance

Buyer resistance became particularly clear after a major Saudi producer announced substantially higher October PE offers to Vietnam, with increases reaching triple-digit levels.

A local trader said the new offers were too expensive to accept and that the company had decided to remain on the sidelines for the time being.

Another Saudi producer also raised its new LLDPE and HDPE offers to Vietnam by $20-80/ton for January and February shipments. Deliveries are expected only after the Lunar New Year, giving buyers another factor to consider alongside uncertainty over future freight costs and the longer lead time.

Despite the resistance, some business was still concluded. One trader purchased a limited quantity because of the producer’s established brand and the need to secure material for specific customers. However, the trader noted that any additional shipping expenses would ultimately be passed on to buyers.

Another converter said the company had rejected the latest offers because buyers were once again being asked to assume the risk of higher freight costs. The converter also reported that HDPE availability from the producer appeared limited but preferred to wait for clearer market signals before purchasing.

Lower-priced cargoes gain attention

As polymer prices remain high, Vietnamese converters are increasingly looking for lower-priced cargoes to control production costs. One converter said the high levels of Middle Eastern offers had encouraged the company to partly switch to Chinese and US material.

However, quality requirements continued to limit the extent to which cheaper alternatives could be used. The converter said some Middle Eastern material still needed to be incorporated into production to meet technical specifications.

The converter also noted that demand for finished products remained relatively healthy, with customers placing additional orders amid concerns about shipment delays and the possibility of further price increases. Despite this, inventories were kept at low levels because of the risk of a future price correction.

High raw material costs pressure converters

Converters with limited flexibility in raw material selection are facing particularly strong cost pressure. One converter said prime-grade material had become too expensive, prompting a shift toward off-grade and recycled material wherever production requirements allowed.

According to the converter, some manufacturers had been forced to suspend production because they were unable to absorb the higher input costs or pass the increases on to customers.

For manufacturers serving customers with strict quality specifications, however, switching to alternative materials is not always possible. Another converter said off-grade material could not be used because of customer requirements and that the company was therefore purchasing only when necessary.

This cautious buying strategy has become increasingly common in Vietnam. Rather than building large inventories at elevated price levels, converters are limiting purchases to immediate production needs while waiting for clearer signals on supply, demand and the possibility of a market correction.

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