Indonesia: Continued forward selling in local market cast shadow on import PP

Forward selling at well below the current market level is no longer a strange thing in the domestic homo-PP market in Indonesia. Over the past several months, such movement has been repeatedly taking place, from which overseas sellers find it very difficult to move cargoes to Indonesia unless a larger discount is available. 

This week, September delivery parcels for yarn grades are concluded in the range IDR18,500,000-18,700,000/ton ($1282-1295/ton) without VAT, FD Indonesia, cash term for quantity 500-1000 tons, lower than many import non-dutiable cargoes. 

The reduction is deemed not necessary considering the tightened domestic supply stemming from the on-going maintenance shutdown at PT Polytama and PT Pertamina. And therefore, there has been heavy speculation that this is an act of protecting market share among domestic suppliers.

Sources are cheekily commenting that forward selling prices in the local ground stand in a perfect position that could discourage interest for both import dutiable and non-dutiable cargoes. Appetite for deep-sea cargoes arriving in September drops visibly right after the local deals become available.    

“We have not been able to attract much buying attention in Indonesia this week after local sellers introduce the new round of forward selling. Most buyers are turning to the domestic ground to avoid currency exchange risk,” an international trader carrying Saudi homo-PP at $1240/ton CIF Indonesia said.

“Our customers have mostly stocked up from the local market and therefore, having a smaller requirement for imports. We have diverted some quantity to Vietnam, where buying interest seems to be better,” another international trader offer Saudi Arabia cargoes at $1240/ton CIF Indonesia added.