2013-04
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2013 |
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Plastic Monthly No.36 Falling at first, stabilized afterwards
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Table of Contents
Plastic Market in April 2
International Oil Price(WTI)—— Fall and rebound. 2
Upstream monomers —— Stable, falling at times. 3
Plastic raw material market —— Stability follows falling. 4
Summary of April 7
Plastic Market Forecast in May. 11
Plastic raw material market——A rise constrained by supply. 11
Appendix - Major Events. 14
Plastic Market in April
International Oil Price(WTI)—— Fall and rebound
Figure 1: International Oil Price (February - April 2013)
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+USD7.82 |
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-USD7.96 |
Source: NYMEX
WTI fell at first and rebounded in April. In the middle of the month, as the demand projected by the economic statistics of the USA is unsatisfactory, the oil price fell by USD8 / barrel, from USD94.64 to USD86.68, making it the lowest in a year.
In late April, the supply and demand associated with the operating rate of oil refineries and the political stability in oil producing regions aroused worries in the market. The oil price rose by around USD8 / barrel from the lowest USD86.68 to USD94.5. The rise basically offsets the fall earlier this month. The price is close to the level beginning this month.
Being affected by both rises and falls, WTI in April slightly fell in April’s fluctuations. The average was USD91.98, falling by USD1.09 from last month’s average of USD93.07.
Upstream monomers —— Stable, falling at times
Figure 2: Upstream monomers (February - April 2013)
Source: Chem99
Source: Chem99
Upstream monomers in April were stable and falling at times. Styrene (SM) and Propylene (C3) are generally stable. As the oil price fell drastically on 16 April to USD2.58, SM fell to the lowest at USD1604 on 17 April. C3 also hit the lowest USD1223 on that day. Later the two prices stabilized and remained stable until the end of the month.
Acrylonitrile (AN) and Butadiene (BD) fell. AN hit the lowest USD1750 in April, only USD110
from the nearest record low USD1640 (7 Nov 2012). The lowest price of BD was USD1400, the lowest level since 2010.
Plastic raw material market —— Stability follows falling
ABS
Figure 3: The Comparison of spot price and cost in an ABS market (February – April 2013)
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March average:USD1966 April average:USD1915 % change in April:-2.7%
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Source: HK Traders
The cost of ABS in the graph is 0.6*SM（Styrene）+0.25*AN（Acrylonitrile）+0.15*BD（Butadiene）+US$300 It hasn’t included expenses like terminal handling charges.
A mainstream brand of ABS fell slightly in April. At the beginning of the month, the market price at spot was USD1949, having the smallest difference between itself and the production cost at USD6 / ton. At the end of the month, the spot price was USD1899, a difference of USD35 / ton between itself and the production cost. Throughout the month, the production cost has always been higher than the spot price.
PS
Figure 4: The Comparison of spot price and cost in a GPPS market (February – April 2013)
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March average:USD1850 April average:USD1824 % change in April:-1.4%
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Source: HK Traders
The cost of GPPS in the graph is SM（Styrene）+US$120 It hasn’t included expenses like terminal handling charges.
The association between a mainstream GPPS brand and its production cost is clear. In late April, the market price at spot of the GPPS was USD1808. SM fell by USD40 / ton in 3 days, leading to a fall in the cost of GPPS. The corresponding production cost was USD1724, a difference of USD84 / ton, making it the lowest in April.
PP
Figure 5: The Comparison of spot price and cost in a HOMO PP Market (February – April 2013)
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March average:USD1497 April average:USD1492 % change in April:-0.3%
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Source: HK Traders
The cost of HOMO PP in the graph is C3(Propylene)+US$150, It hasn’t included expenses like terminal handling charges.
In April, the price difference between HOMO PP and its production cost has been widening, and reached the largest on 21 April. At that time, the price of upstream monomer C3 has fallen by USD86 / ton within a week, dragging the production cost down to USD1373. A mainstream HOMO PP’s price at spot at that time was USD1483, making a difference of USD110 / ton. As time goes by, the decrease in market prices gradually declined and stabilized at last.
Summary of April
International Oil Price (WTI)
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Being affected by both rises and falls equally, WTI in April slightly fell in April’s fluctuations. The average was USD91.98, falling by USD1.09 from last month’s average of USD93.07.
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In the first half of April, under the influence of stagnant global economic growth and a fall in expected demand, the oil price fell like the stock market and bulk commodities. In the middle of the
month, the decline intensified following the gold price. Both futures in Europe and the USA have fallen by over 9%.
The winter peak season for heating oil has officially ended starting from the second season. The fall of International Oil Price became greater. It has fallen by USD4.8 / barrel within 2 days in mid-April. The price was back to below USD90. The improvement in Euro debt has favoured oil price, while the potential geopolitical risks have also supported the oil price, making the oil price go up again, rising to USD94.50.
upstream monomer
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Ethylene (C2): The decrease in the price of naphtha affected the trend of downstream Ethylene material. In the face of fewer materials, Middle East Ethylene, originally sold to Europe mainly, shifted to Asia. The price decrease amounted to 5.3% in 2 weeks. |
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Pure benzene (BZ): There were overhauls of pure benzene devices involving 2.4 million tonnes of benzene in April in Japan, Korea, Taiwan, Thailand and China. The production capacity of facilities in overhaul is about 1.3 million tonnes. The decrease in supply supports the price of pure benzene. |
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Acrylonitrile opened 4 times in April with the price all going down. The accumulated decrease amounted to USD150. |
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Upon entering the tapping period in April, the supply of natural rubber was abundant. The demand for synthetic rubber declined. The price of Butadiene reached a historical low. |
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The peak season of Propylene overhauls has passed upon entering the second season. With an increase in supply and a fall in the price of Propylene oxide, the price of Propylene fell. |
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丙烯腈4月份累計開盤4次，全部為下跌狀態，累計跌幅為USD150。 |
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丙烯腈4月份累計開盤4次，全部為下跌狀態，累計跌幅為USD150。 |
Hit by a falling oil price, the falling trend of its downstream basic chemical products was obvious. Styrene (SM) fell by USD1 / ton, followed by Propylene (C3), which fell by USD25 / ton. It further pulled down the cost of Acrylonitrile (AN), which fell by USD198 / ton. As the increase in the price of Butadiene (BD) has almost gone completely in last month, it has reached the historical low in April, falling by USD350 / ton.
Comparing with the oil price and the drastic decrease in the prices of its 4 major downstream
basic chemical products, the market of Asian pure benzene (BZ) stood still alone. In the first half of April, the price of Asian pure benzene has increased by USD50 / ton. One reason was that there were centralized overhauls in Asia cracker plants. Also, the stable price of European and American pure benzene has supported the Asian market. In addition, in late April, 2.9 million tonnes of Styrene device overhauls ended and were about to operate again in Japan, Korea and Middle East. The demand for pure benzene improved significantly.
Plastic raw material market
From the linking diagrams above, the trend of plastic raw materials are mostly caused by poor market atmosphere. The actual supply was not abundant, and the ratio dominated by demand was smaller too. Therefore, when there was a trigger point in the market atmosphere, the hidden sudden U-turn of prices might be exposed within a short period. ABS was the first one to be affected.
In April, ABS fell by about USD51. Theoretically speaking, its price is about USD200 more expensive than the price of HIPS. However, after the fall, the two prices were comparable. Some HIPS models were even more expensive than ABS, making it a rare case of price level abnormality.
The trend of HIPS and GPPS were close, with both falling by USD25 throughout April. Upon entering the second season, the demand from some household appliance enterprises has increased, but the speed of recovery was still slow. Chemical plants now only produced after receiving orders, which helped to control its output and kept the price in stability overall.
Being affected by monomer Propylene which fell by USD80 in about a week, the price of PP started to go down. It decreased by USD25 in April. The Dock Strike in Hong Kong led to a delay in the shipment of Taiwanese goods. The market, which lacks stocks on spot originally, gradually showed conditions of intense supply.
Plastic Market Forecast in May
Plastic raw material market——A rise constrained by supply
Referring to the above figure, the plastic market in May will be mainly affected by the factors above, indicating a short supply of stock on spot in the market. Also, in reference to the peak and slack seasons in the past, with May is the month entering the peak season, the persisting plain end demand since Lunar New Year may be reversed. We made the following discussions based on this:
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ABS The increase is brewing |
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PS Steady |
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PP Steadily Up |
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After the fall, the price of SM has restored to the level in early December 2012. But USD1600 was still the historical high since 2010. .. |
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The prices of AN and BD were still at historical low. It is likely to rebound in May. |
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Chemical plants produce after receiving orders. The balanced supply and demand keep the price stable. |
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With the overhaul season of C3 ended, the supply gradually relaxed. It fell by USD80 in April, but gained support at USD1233, which is only USD11 from the nearest historical low USD1212 (21 Dec 2012), though it may rebound from the lowest. |
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The stock on spot is intense. There are mostly future orders. After the price reached the lowest, when there is a trigger point in the market, the price is likely to rebound. |
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The price of ABS has been falling for long and agents replenished little. The goods ordered are mainly for earlier orders. Little stock on spot is left in the market.
走低後的價格接近HIPS，甚至GPPS。越跌越緊，價格反彈機會大。 |
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Device dynamics: ABS: ＊LG Chem of Korea plans to reduce the operation rate of its ABS device from 80% to 70%. That device produces 650 thousand tonnes annually. ＊Kumho Petrochemical of Korea cut the load of its ABS device from full load to 50%. That device produces 250 thousand tonnes annually. ＊The operation rate of Taiwan Formosa Chemicals in the second half of March has decreased from the earlier 90% to 75%. ＊The ABS device of Toray Industries in Malaysia maintained an operation rate of 70%. That device produces 330 thousand tonnes annually. PS: ＊The operation rate of HK Petrochemical’s PS device decreased to 70%. ＊Denka of Japan plans to close the PS device in Singapore in 10 April. That device produces 200 thousand tonnes annually. PP: ＊The PP device of Taiwan Formosa Chemicals in Ningbo plans for an overhaul from 10 April. Its supply is limited recently. Source: I-zzz.com |
The opening price of ABS plants was quite high in early April. The wait-to-see attitude was strong in the market. Agents did not replenish much and market circulation was thus small.
At the end of the month, chemical plants were under pressure. Their prices quoted dropped. At this moment, more of the goods ordered by agents were in stage of pre-orders. The actual stock in the
market was still small.
Experiencing a fall for two months, the current market price of ABS is close to that of HIPS, and its price difference between generic GPPS is declining. In a very situation like this, ABS is very likely to increase by 20 - 30% in the coming early May.
Constrained by a high price of Styrene and limited production in chemical plants, stock available on stock is very limited.
Chemical plants are likely to maintain the strategy of production upon receiving orders. Under the prerequisite of a fair market demand for PS, its price remains stable. The cost support in May is steady. As the rise is slightly weak, the general trend is still stable.
As the price of monomer Propylene fell by a larger extent of USD80, the market price of PP was already at a low level in late April. Some businessmen were worried that the Ya'an Earthquake might hit the spot market of PP. As the market supply on spot is quite limited, there are mostly orderings of futures. According to this trend, the market price of PP in May is likely to be influenced by its supply, and may rise steadily.
Appendix - Major Events
9 April 2013 The Bank of Japan has decided at a monetary policy meeting that it will take around 2 years to realize the new inflation target of 2% proposed at the beginning of the year. It will double the monetary base within 2 years, and increase the purchase of national debts lasting longer and risk assets.
16 April 2013 With a slower global economic growth, the price of New York gold futures has fallen drastically by 9.3%, the largest fall in a single day since the 1980s. WTI has fallen by 2.8% to USD88.17 in a day. The closing price of the year was USD90, the first time ever in its history.
24 April 2013 The report published by Goldman Sachs Group (GS) lowered its near-term prospects of bulk commodities and the price expectation of oil, as the demand prospects from China to Europe have all been weak.
～The End～
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