Indonesia’s PP and PE Markets Slide Sharply After Import Duty Cuts

Indonesia’s polypropylene (PP) and polyethylene (PE) markets have moved into a strong correction phase after reaching record highs in recent weeks. Both import and domestic prices are now falling as market fundamentals shift, with lower demand, improving supply conditions, and new government policies putting heavy pressure on prices.

According to market estimates, local PP prices had previously surged nearly 100% from pre-war levels, while PE grades climbed by more than 110% during the same period due to supply disruptions and higher feedstock costs linked to Middle East tensions. However, the market has now reversed sharply. Within just two weeks, domestic PP prices dropped around 24% from their peak levels, while PE prices declined by nearly 16-17%.

Market participants believe the correction may continue, as easing supply concerns and weaker demand are beginning to outweigh earlier bullish factors that had driven the rally.

Import and Domestic Markets Both Under Pressure

Import PP and PE prices across Indonesia have softened steadily since mid-April, with declines ranging from $25-75/ton depending on grade. LLDPE film recorded some of the largest corrections as buyers became increasingly resistant to elevated prices.

Domestic markets have seen even sharper declines following multiple aggressive price cuts from a major Indonesian producer. After previously implementing massive increases, the producer has now announced several consecutive reductions since late April in an effort to revive buying activity.

Within a little more than a week, cumulative reductions reportedly reached:

Homo-PP Raffia & Injection: down IDR10,020,000/ton ($577/ton)
LLDPE Film: down IDR8,110,000/ton ($467/ton)
HDPE Film: down IDR8,090,000/ton ($466/ton)

Other PP and PE grades also posted substantial declines ranging between IDR5,920,000-9,060,000/ton ($341-522/ton), reflecting the growing bearishness in the domestic market.

Import Duty Removal Adds Fresh Pressure

One of the biggest factors reshaping Indonesia’s polymer market is the government’s decision to temporarily remove import duties on several key plastic resins, including PP, HDPE, and LLDPE, for six months.

The move is intended to support downstream industries and help stabilize prices, but traders expect it will also encourage higher import volumes, especially from non-ASEAN suppliers.

Previously, imports from countries such as Saudi Arabia, the UAE, the US, China, and South Korea were subject to duties ranging between 5-15%. With those tariffs removed, overseas cargoes are expected to become more competitive, increasing pressure on local sellers to reduce prices further.

Chandra Asri Restores Supply Stability

Additional downward pressure is coming from improving domestic supply after PT Chandra Asri lifted its force majeure on PP and PE supply.

The company had earlier faced feedstock shortages and logistics disruptions tied to the Middle East crisis and Strait of Hormuz tensions. To maintain operations, it secured alternative feedstock supplies from multiple regions, including the US, while also relying on support from its Singapore facilities.

With operations stabilizing and regular deliveries resuming, domestic polymer availability is improving again. Market players say the return of steady local supply is removing some of the tightness that previously pushed prices sharply higher.

Weak Demand Continues to Limit Recovery

Despite recent price corrections, demand conditions remain soft across Indonesia’s downstream sectors.

Converters continue to report weak order inflows and difficulties passing higher raw material costs onto end-users. Most buyers are purchasing only for immediate requirements, while many remain cautious and continue asking for additional discounts.

Some traders noted that even though prices have dropped considerably, buyers still view current levels as relatively expensive compared to downstream affordability.

Market participants now expect further pressure ahead as rising import competition, normalized domestic production, and sluggish demand continue to weigh on Indonesia’s PP and PE markets.

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