Gotrade News - Indonesian plastic raw material prices have surged nearly 80%, from USD1,000 to USD1,800 per metric ton over recent months. The country's plastics industry is now entering a price reset phase as production cost pressures become unsustainable.
Key Takeaways:
- Plastic raw material prices surged 80% from USD1,000 to USD1,800 per metric ton
- Indonesia imports 70% of its plastic raw materials from the Middle East, now disrupted by conflict
- Manufacturers cannot guarantee production continuity for the next one to two months
Fajar Budiono, Secretary General of Inaplas, confirmed the significant price increase. Downstream plastic product prices have also risen 40% to 80%, according to Kompas.
Global supply chain disruptions are the primary driver behind the price spike. Middle East conflicts have disrupted shipping routes through the Strait of Hormuz, a critical import corridor for Indonesian plastic raw materials.
Indonesia imports 70% of its plastic raw materials from the Middle East. The supply disruption has persisted for approximately one month with no signs of improvement.
Price increases were temporarily held during the Ramadan and Lebaran holiday period due to distribution focus. However, the post-holiday period brought sharp, unexpected price surges.
The Indonesian Employers Association (Apindo) expressed serious concern about production continuity. Bob Azam, Head of Industrial Relations at Apindo, stated manufacturers cannot guarantee production capacity through April and May.
Manufacturers are implementing cost-control strategies to survive. Measures include reducing product thickness, blending cheaper materials, and increasing recycled plastic usage.
Inaplas has proposed eliminating LPG import duties to reduce plastic production costs. Alternative sourcing from the United States is available but involves longer shipping times and higher logistics costs.
Fajar Budiono assessed this situation as more than an ordinary price increase. The market will sooner or later adjust to a new, permanently higher price level, he told Kompas.
