Indonesia’s plastics processors resist further PP hikes

02 April 2009 09:47  [Source: ICIS news]

SINGAPORE (ICIS news)--Plastic processors in Indonesia are resisting further hikes in polypropylene (PP) import prices, citing weak downstream demand and slow rise in domestic prices, industry sources said on Thursday.

Middle East and Asian producers plan to raise the price of benchmark PP yarn grade to $1,050/tonne (€798/tonne) CFR (cost and freight) Indonesia for April shipment, in line with the rising China market. However, this price level is facing a strong resistance from Indonesian buyers, local traders said.

Bids for imported yarn grade were around $1,010-1,020/tonne CFR Indonesia for April shipment, the local traders said.

"Processors are facing a tough time as domestic consumption has fallen significantly due to the global economic downturn," one of the traders said.

Most imported PP is used for local consumption, he added.

Local producers have only raised prices by $20/tonne this week although import prices rose by around $100/tonne last week, and many processors believe this indicates that the higher import prices were not sustainable, a second local trader said.

Local producers are offering the same grade at $1,140/tonne DEL, which is equivalent to around $970/tonne for the Middle East product and around $1,060/tonne for products from the Asean region, all on a CFR Indonesia basis, local traders said.

The local product has a great influence on local buying sentiment as it accounts for about 80% of local consumption, he said.

Indonesia’s three PP producers, namely Pertamina, PT Polytama Propindo and Tripolyta, have a combined capacity of 675,000 tonne/year.

($1 = €0.76)

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By: Chow Bee Lin
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