Indonesia may delay PE, PP import quota enforcement
The Indonesian trade ministry may delay the enforcement of a mandatory quota for polyethylene (PE) and polypropylene (PP) imports to Indonesia that was earlier expected to come into effect on 10 March, according to local sources.
The enforcement could be delayed by at least three months, based on local associations' appeal requests to the trade ministry, and this may be announced soon, according to market sources. The associations had mostly requested for a grace period to be given to PE and PP importers after the mandate takes effect on 10 March. No official announcements have been made.
Local associations including the Indonesian chamber of commerce and industry (Kadin), Indonesian employers association Apindo, Indonesian food and beverage association Gapmmi and several plastics associations including Aphindo, Giatpi and Abofi have opposed or sought delays in the import quota mandate, mainly because of a lack of clarity in the application processes that could affect converters' operations later.
International business associations in Indonesia including the Korean chamber of commerce and industry Kocham, American chamber of commerce Amcham and the European chamber of commerce Eurocham have also undertaken similar courses of action.
The Indonesian trade ministry on 11 December last year announced that Indonesian PE and PP importers will need to apply for specific quotas to be able to import polymer resins from 10 March this year, or risk their cargoes getting rejected during customs clearance. A surveyor report is also required for resin imports. Importers can only begin their applications from 10 March.
Indonesian PE and PP buying interest and prices soared from late December until January, with importers stocking up for cargoes to arrive before the enforcement date. Spot polymer supplies in southeast Asia tightened in January because of unexpectedly higher Indonesian imports, which pushed up regional prices up, although higher feedstock costs also supported the price hikes.
The month-to-date average February southeast Asian duty-free LLDPE film price was at $1,065/t cfr southeast Asia, $79/t higher than average prices in December 2023.
The month-to-date February average of southeast Asian duty-free PP raffia prices was at $1,040/t cfr southeast Asia, $81/t higher than December 2023's average prices.
For a comparison, month-to-date February LLDPE film and PP raffia prices in the key Chinese market were at $935/t and $890/t cfr China respectively, only $7-9/t higher than December 2023's average prices.
Imports and domestic buying slows
Indonesian PE and PP import discussions have slowed down since early February as most exporters are not able to guarantee cargo arrivals before 10 March. Converters and distributors also experienced a rise in their inventories because of earlier stock-ups.
Southeast Asian PE and PP price hikes began slowing down in February because of weaker Indonesian import interest, while regional buyers are unwilling to secure supplies at current high prices, citing persistently weak downstream demand.
In the Indonesian domestic market, buying interest has also slowed down, with converters likely holding higher inventories.
Downstream PE and PP consumption in Indonesia has likely been high in January-February as converters have raised production of finished goods in anticipation of higher consumption during the recent general election in February and the upcoming Eid al-Fitr holidays in April. But converters are expected to reduce operating rates in March–April during the Islamic fasting month of Ramadan and Eid al-Fitr holidays in the first half of April.
Delay to help importers gain clarity
A delay or a grace period would likely allow Indonesian PE and PP importers and converters to achieve more clarity on the application procedures for the quota.
Such a delay would also lengthen the time for importers to apply for other licenses that would allow for imports without restrictions, although the application process is stringent and likely only attainable by large-scale converters with good company records, said local sources. Importers that have the Indonesian 'MITA' and 'AEO' import certifications as well as export-oriented converters can currently import polymer resins without applying for a quota. Importers with bonded warehouses could store their resin imports temporarily while they apply for import quotas.
PE and PP prices in Indonesia are therefore less likely to soar to the extent that was observed in January, after the mandate takes effect officially, with importers likely able to manage the circumstances better.
The stocking up of domestic PP supplies and unplanned cuts in local production have led to domestic prices soaring in Indonesia in the past two months. Import discussions that were halted in February because of tight delivery windows further widened the gap between domestic and import PP prices in the country.
But a delay in the import quota enforcement could possibly lead to domestic PP prices falling, especially for the commodity grades and regional PP import prices stabilising when Indonesia resumes imports.
Indonesia imported 749,000t of combined LLDPE and HDPE in 2023, more than 45pc of its annual consumption, according to Argus estimates. Import volumes increased by 21pc from 2022.
The country also imported 1.25mn t of PP in 2023, around 65pc of its annual PP consumption. But this import volume was lower by 5pc when compared with 2022.
![](https://public-assets.argusmedia.com/2024/02/23/chart1_southeastasiaandchinalldpepricesusdt23022024061309.jpg)
![](https://public-assets.argusmedia.com/2024/02/23/chart2_southeastasiaandchinapppricesusdt23022024061451.jpg)
Related news posts
Japan’s Resonac to optimize petchem business
Japan’s Resonac to optimize petchem business
Tokyo, 23 July (Argus) — Japanese petrochemical producer Resonac plans to optimize part of its petrochemical business by creating a new wholly-owned subsidiary by 1 August. Resonac decided on 23 July to set up Crasus Chemical, which will take over production of basic petrochemical goods from Resonac. It aims to set up the subsidiary as an independent, listed company to clarify and facilitate performance evaluations and to simplify a chain of command to speed up decision making. Resonac plans to achieve quicker decarbonization of its petrochemical production and to enhance competitiveness and profit growth. Crasus will be in charge of manufacturing and selling basic petrochemical goods like ethylene and propylene, goods made from acetic acid and synthetic resins. Resonac owns the 618,000 t/yr Oita ethylene cracker in south Japan's Oita prefecture that will will also be transferred to Crasus. Petrochemicals has accounted for around 20pc of Resonac's sales revenues. Japan's petrochemical firms have attempted to optimize their businesses with intensifying international competition and shrinking domestic demand. Mitsubishi Chemical has also tried to reorganize its basic petrochemical business, although it has yet to announce firm plans. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House to vote on waterways bill
US House to vote on waterways bill
Houston, 22 July (Argus) — The US House of Representatives is expected to vote on 22 July on a waterways bill that would authorize new infrastructure projects across ports and rivers. The Water Resources Development Act (WRDA) is renewed typically every two years to authorize projects for the US Army Corps of Engineers (Corps). The bipartisan bill is sponsored by representative Rick Larsen (D-Washington) and committee chairman Sam Graves (R-Missouri). The full committee markup occurred 26 June, where amendments were added, and the bill was passed to the full House . A conference committee will need to be called to resolve the different versions of the bill. The major difference between the bills is that the House bill does not include an adjustment to the cost-sharing structure for the lock and dam construction and other rehabilitation projects. The Senate Committee on Environment Public Works passed its own version of the bill on 22 May, with all members in favor of the bill. The House version of the bill approves modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland, along with 11 other projects and 160 feasibility studies. One of these studies is a $314.25mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mitsubishi, Neste aim to boost bio-naphtha supplies
Mitsubishi, Neste aim to boost bio-naphtha supplies
Tokyo, 16 July (Argus) — Japanese trading house Mitsubishi and Finnish refiner Neste plan to boost sales of Neste's biomass-based naphtha by enhancing their partnership in Japan. The companies signed a partnership agreement on an unspecified date, aiming to co-operate on prompting a switch from conventional petroleum naphtha to Neste's bio-naphtha. They plan to encourage Japanese downstream companies or users of petrochemical goods and plastics, like food and beverage suppliers, apparel firms and electric appliance manufacturers, to introduce bio-naphtha into their supply chains. Mitsubishi and Neste have already partnered on delivering bio-naphtha to produce renewable paraxylene for Japanese consumers Goldwin and Suntory . Japanese companies are increasingly attempting to incorporate bio-naphtha for their decarbonisation strategies. Japanese petrochemical producer Resonac has produced biomass-based olefins like ethylene and propylene since June by purchasing bio-naphtha from Neste. Fellow petrochemical producer Mitsui Chemicals bought bio-naphtha from Neste to process it at its Osaka cracker. Idemitsu and Toray have been partnering to produce styrene monomer and acrylonitrile butadiene styrene resin from bio-naphtha. Japan imported 6mn t of petroleum naphtha during January-May, down by 5.9pc from the same period in 2023, according to finance ministry data. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Gulf polymer plants restarting following hurricane
US Gulf polymer plants restarting following hurricane
Houston, 12 July (Argus) — Some US Gulf Coast polymer plants and rail lines are resuming operations following shutdowns as a result of Hurricane Beryl earlier in the week. Multiple polyethylene (PE) and polypropylene (PP) units shut down pre-emptively before the storm, which came ashore in Matagorda, Texas, on 8 July, and many are still in the process of restarting. Formosa Plastics had pre-emptively shut down operations at its Point Comfort, Texas, site, but did not receive any major damage from Hurricane Beryl. The site, including approximately 1.8mn t/yr of PE and 917,000 t/yr of PP production, is in the process of resuming operations with the end of next week as the target date for a complete return, the company said in a statement. The status of multiple other PE and PP units in the region was not immediately available. Companies including Dow, Ineos, Braskem America, and LyondellBasell, which all had some units shut down during the storm, did not immediately respond to requests for operational updates. In addition to plant outages, polymer producers had been experiencing transportation issues earlier in the week due to flooding, but the repair of Union Pacific's lines in the Galveston area yesterday has allowed rail operations to resume, according to a statement from the company. It will take several days to work through the remaining train congestion, and widespread power outages will likely continue to cause delays throughout the impacted area. By Cole Sullivan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![Generic Hero Banner](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D8ec86dce0f724687bd325a9a917cffae%26hash%3D9FD39B08C9D84A160C91A3649C40A186&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more