Southeast Asian polyethylene (PE) prices fell to more than one-year lows in late August, on the back of new capacities coming on line and weak demand limiting import interest.
The southeast Asian dutiable linear low-density polyethylene (LLDPE) film prices fell to $920-950/t cfr southeast Asia on 29 August, the lowest since December 2023, although the gap against Chinese LLDPE film prices remains high at $75/t. Dutiable high-density polyethylene (HDPE) film prices fell to $900-930/t cfr southeast Asia in the same week, the lowest since September 2020.
Several producers including Philippines' JG Summit, Malaysia's Lotte Titan and PRefChem as well as Vietnam's Long Son shut some or all of their cracker and polyolefin capacities since late 2024 because of margin concerns or technical issues.
Tighter supplies supported regional PE prices in the first half of 2025 despite weak demand, making southeast Asia a preferred export market.
The average of southeast Asian-China price gaps for LLDPE film and HDPE film reached highs of $101/t and $61/t respectively in the second quarter of the year, around $57/t and $27/t higher than the same period a year earlier. Higher southeast Asian LLDPE film prices also attracted sporadic offers for Chinese-origin LLDPE, mainly to Vietnam, in July.
But these unusual gaps are expected to normalise as new capacities exert pressure on southeast Asian PE prices. The southeast Asian-China price gaps for LDPE film and HDPE film have already fallen to $40/t and $25/t respectively on 29 August, $5/t and $17.50/t lower than a year earlier.
Strong regional supply
Tighter southeast Asian PE supplies in the first half of 2025 have encouraged other producers in Thailand and Indonesia to raise their plant operating rates to fill the supply gaps, especially for HDPE.
The combined average operating rates of LLDPE and HDPE capacities in Thailand and Indonesia stood at around 77pc over January-June, up by 14pc against the same period in 2024, according to Argus estimates.
The southeast Asian duty-free LLDPE-naphtha price spread averaged at $414/t in January-June, up by just $25/t against a year earlier. The duty-free southeast Asian HDPE-naphtha price spread was stable at $384/t in the first half of the year despite several plant shutdowns, as other regional producers ramped up operations.
The start-ups of PRefChem's 750,000 t/yr PE plant and Long Son's 1mn t/yr PE plant from late June and August brought back LLDPE supplies and raised HDPE supplies further, pressuring prices in August.
Regional producers also offered local PE supplies at competitive prices to defend their market shares, prompting buyers to favour local supplies and weighing on import price ideas.
Meanwhile, US PE exports to southeast Asia rose to 743,000t in the first half of 2025, up by nearly 22pc or 131,000t against the same period in 2024. This was largely driven by Vietnam — US PE exports to Vietnam rose by nearly 75pc to 216,000t in January-June. Conversely, US PE exports to China fell to 867,000t in the period, down by 29pc against 2024, according to Global Trade Tracker (GTT) data.
PE exports to southeast Asia are likely to remain high in July-December as US producers continue to diversify export destinations in the face of trade barriers into Brazil and China.
Brazil on 29 August announced the imposition of provisional antidumping duties on PE imports from the US and Canada into the country effective immediately with validity up to six months. But the EU proposed zero tariffs for US PE imports into the region, which could help absorb significant US supplies.
The US-southeast Asia tariff talks in July may further boost US exports to southeast Asia, with Vietnam, Malaysia, Indonesia, Thailand and Philippines offering zero tariffs for US imports, although details of qualified products have yet to be announced.
Weak demand to trigger production cuts
Seasonally higher PE consumption in September-October could support regional prices, but weak demand and increased supply are likely to exert downward pressure on prices.
US reciprocal tariffs on southeast Asian goods and weaker regional consumption suppressed PE consumption this year, forcing converters to operate their plants at 60-70pc capacity.
Regional producers are tracking production margins closely and weak margins are likely to trigger production cuts among producers to minimise losses and manage inventories in the fourth quarter. Thailand's PTTGC is expected to shut a 400,000 t/yr LLDPE unit for maintenance in November. Indonesia's Chandra Asri is tentatively scheduled to shut its 336,000 t/yr HDPE unit and 400,000 t/yr LLDPE unit in November for maintenance.
Elsewhere in Asia, South Korean petrochemical producers have agreed to cut around 2.7mn-3.7mn t/yr, or up to 25pc of their total cracking capacity and develop a restructuring plan by the end of this year, a move that could possibly support feedstock ethylene prices and encourage South Korean PE producers to prioritise export markets with the highest netbacks.
