2013-05
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Plastic Monthly
How do things go
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No 37 |
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2013 |
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§ Chart Analysis P2 Plastic Market in May P6 Summary of May ⊙ Forward P10 Plastic Market Forecast in June P10 Plastic raw material market – Stability with small volatility ♂Monthly News P12 Major Events
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Table of Contents
Plastic Market in May 2
International Oil Price (WTI)——Fluctuate at a high level 2
Upstream monomers -- Generally stable 3
Plastic raw material market -- Stable 4
Summary of May 6
Plastic Market Forecast in June 10
Plastic raw material market -- Stability with small volatility 10
Appendix - Major Events 12
Plastic Market in May
International Oil Price (WTI)——Fluctuate at a high level
Figure 1: International Oil Price (Mar - May 2013)
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MayWTI +3.3% |
Source: NYMEX
The data published in early May in Europe showed that the inflation rate of the Eurozone in April had reached a 3-year low, with the unemployment rate was as high as 12.1%. International Oil Price has fallen to the monthly low of USD91.03, but then it surged third in a row, by USD5.13. This reinforced the high oil price.
In mid-May, the oil price has reached a high level twice, at USD96.62 and USD96.71 respectively. The major reason is the Israeli bombardment of Syria. Despite neither country is a major oil production zone in the Middle East, but there are important ones nearby. If the war spreads, the oil supply in Middle East and Persian Gulf will be affected. As situation in Middle East is very sensitive, it also told us that there was resistance for the oil price to rise again from USD96 in May.
In general, the average value of International Oil Price was USD95.02, a USD3.04 increase from the April average of USD91.98.
Upstream monomers -- Generally stable
Figure 2: Upstream monomers (Mar - May 2013)
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May SM +0.8% |
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May C3 -0.4% |
Source: Chem99
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May AN -4% |
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May BD +2.4% |
Source: Chem99
In May, besides Acrylonitrile (AN), which fell by quite a large extent, the prices of Propylene (C3)、Styrene (SM)和Butadiene (BD)were all stable.
The average of AN was USD1725. It only increased slightly by USD5 in an opening by the end of the month. It fell by USD71 from the April average USD1796. C3 generally continued with the stability last month. The May average was USD1256, a slight fall of USD5 from April’s average USD1261.
SM mostly rose or fell consecutively in May. In general, it went up comparing with last month. It increased by USD13 from April average USD1633. After reaching a historical low at USD1400 in April, AD rebounded in May. The monthly average was USD1467, a USD34 increase from April average.
Plastic raw material market -- Stable
² ABS
Figure 3: (Mar - May 2013) The Comparison of spot price and cost in an ABS market（Mar 2013 - May）
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MayABS +0.2% |
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.
In late May, ABS increased significantly. Within a few days, the increase has improved the monthly average slightly. The average of an ABS was USD1919, a USD4 increase from April average USD1915. It is noted that the spot price is getting closer to the cost, and is set to surpass the cost.
² PS
Figure 4: The Comparison of spot price and cost in a GPPS market (Mar - May 2013)
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MayGPPS +0.1% |
Source: HK Traders
The cost of GPPS in the graph is SM（Styrene）+US$120 It hasn’t included expenses like terminal handling charges.
GPPS was generally stable in early May. The increase was made more significant at the end of the month. A model of GPPS has risen from USD1825 to USD1842. The monthly average was USD1826, an increase of USD2 from last month’s average. The production cost, unlike in the past, fell at the end of the month. The major reason was the oil price declined a bit at that time.
² PP
Figure 5: The Comparison of spot price and cost in a PP Market (Mar - May 2013)
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MayPP -0.4% |
Source: HK Traders
The cost of HOMO PP in the figure is calculated by C3（Propylene）+US$120. It hasn’t included expenses like terminal handling charges.
In May, the association of spot price and cost is significantly reflected in the trend of HOMO PP. This shows that its production cost is influential in the spot price. In other words, the external market factors did not quite impact the price of PP. A model of HOMO PP steadily rose in the first half of the month, and rallied more at the end of the month like the change in cost. However, as it increased a lot in April, the average spot price in May was USD1486, a USD6 decreased slightly from USD1492, the average last month.
Summary of May
International Oil Price (WTI)
In May, the number of rises and falls in the International Oil Price are comparable. With favourable and unfavourable factors wrestling with each other, the International Oil Price increased slightly by 3.3% as a whole.
Starting from Mid-May, International Oil Price has fallen 4 times in a row twice. Between these 2 falls, there was a 4 times in a row increase. In general, the trend of International Oil Price is apparently periodic.
The Chinese economic growth of the first quarter was lower than expected. It is hard to realize the annual 8% economic growth this year, which may hinder oil demand. At the same time, as the scheduled overhauls of oil refinery have ended and the new oil refinery in Saudi Arabia has started to operate, oil price went down.
At the end of May, here comes the summer peak season of oil demand. Refineries in the USA may increase their production to meet market demand. Also, other regions in the Northern hemisphere will consume more energy and increase the oil demand.
With factors above, the May average of International Oil Price was USD95.02, a rise of USD3.04 from USD91.98, the average last month.
Plastic raw material market
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Ethylene: ●Ethylene（FOB Korea）increased by a total of USD70/ton in May ●The price of Naphtha remained high. The operation rate of crackers in some Taiwanese chemical plants decreased to 90% |
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Pure Benzene: ●Pure Benzene (FOB Korea) fell by USD9/ton in May. ●The overhauls on Asian Pure Benzene devices resulted in 1.967 million tons of supply. |
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Styrene（SM）： ●Styrene（FOB Korea）increased by USD13/ton in May ●The storage at East China Port declined to 60,000 tons, the lowest since January.
●In the past, the traditional CRT TV demanded plastic materials. But since electronic products go slimmer, the demand for SM remained weak. Cracker plants in Middle East and North America closed down successively. As time goes by, without new productivity increase, a shortage of SM formed and the price remained high. |
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PS: ●The PS stock in USD is highly scarce. The opening price of chemical plants remained stable and rose slightly
●In mid-May, the factory price of mainland chemical plants was about 10 - 200 dollars/ton. |
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ABS: ●Limited by cost pressure and market demand, the price of some ABS models rebounded.
●In mid-May, some mainland chemical plants increased the factory price to 200-300 dollars/ ton. |
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International Oil Price（WTI）: ●In May, the WTI rose by USD3.04/barrel.
●The stock market is the benchmark of oil market. In May, the Dow Jones Index rose by 0.4%, hitting 6 historical highs in 9 days of transaction. |
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Propylene（C3）： ●Propylene (FOB Korea) fell by USD5/ton in May.
●Propylene rose and fell at times. Although the average decreased from last month's, no fall on transaction day was recorded in May.
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Acrylonitrile（AN）： ●Acrylonitrile fell by USD71/ton in May.
●The price of Acrylonitrile fell continuously. The spot price of some producers went down and suppressed the profit margin. continuously. |
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Butane: ●In Korea and Taiwan, producers including Formosa Petrochemical has decreased the operation rate of crackers to 80%. The operation rate fell further in May. |
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Butadiene（BD）： ●Butadiene（FOB Korea）rose by USD34/ton in May.
●The tire production for the first quarter fell by 2.7% same period last year. In May, Butadiene rebounded but lacked support. |
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PP： ●In early May, some PP in the USD market switched to mainland market.
●In late May, the PP plants increased the factory price to USD10-20. |
＊Some statistic is from Chem99
In the plastic raw material of May, the price of some models rose but remained stable in general. In early May, the shortage of ABS was very apparent. However, due to the fall in the previous month, despite the short supply, the market price was still lower than the cost by USD30. Limited by cost pressure and market demand, the opening price of chemical plants approached its cost. The market price of ABS rose slightly and remained stable in general.
It is hard to find stock of PS in market. The price of its monomer material Styrene remained high. In early May, the opening price of chemical plants was generally stable. The market price was higher than the opening price by USD20. The market price of some shatterproof plastics was still higher than that of ABS. At the end of the month, as chemical plants received orders and stock was on short supply, the price rose slightly.
In May, PP was still mainly on order. In early May, the PP demand in East China was better, causing goods in the USD market to shift to mainland. At the end of the month, chemical plants in Taiwan gradually increased the factory price. Throughout the month, most circulation is on futures. The price rose at times and generally remained stable.
Plastic Market Forecast in June
Plastic raw material market -- Stability with small volatility
June is already the last month of the 2nd quarter. Being mostly stable in May with a trend of slight increase, how will the plastic raw material market go? According to the information available, our discussions are as follows:
Being a by-product of oil, factors affecting the price fluctuation of plastic raw materials are manifold. Upstream monomers directly associate with production cost and affect the price quote of chemical plants. Also, with other factors like shipment, stock volume and the degree of downstream demand, the price quotes of traders will reflect rich market information.
Referring to the above summary of chart analysis, the cost of ABS has long been higher than spot price. The factory price of chemical plants was increasing in early May, with an increase of mostly USD10-20/ton.
The stock volume of chemical plants is mostly from East China, followed by South China. This offset the pressure on sales and inventory of chemical plants. With a limited sale in South China, the shorter supply there keeps the price stable and the it is difficult for the price to fall.
As there is less profit, demand of traders slowed down and they became more cautious in placing orders. There are fewer traders with actual stock and price. If there are changes in the market, the supply will definitely be strained.
As the price of Styrene (SM) remains high continuously, it will be difficult for both the cost and market price to fall. As the high temperature weather in June is approaching, the storage period of SM monomers will be shorter than that in low temperature. This also contributes to price fluctuation, making the price of PS very likely to fluctuate slightly in June.
Some brands of PP for goods in Taiwan are mostly placing orders. As time goes by, the market spot volume is limited. This also leads to easier supply constraint in June, which can support market price. The price is very likely to grow steadily.
Entering the traditional peak season, the demand in May has significantly improved. In June, the demand is estimated to increase gradually. Downstream factories should replenish their stocks appropriately to lock the profits with reference to their own costs and availability.
Appendix - Major Events
2 May 2013 The US Federal Reserve announced to remain the ultra-low interest rate of 0-0.25% despite the unemployment rate was higher than 6.5%. The quantitative easing policy of purchasing USD85 billion of treasury bonds and mortgage-backed securities (MBS) monthly remained unchanged.
3 May 2013 The European Central Bank decided to reduce the leading interest rate of the Eurozone by 0.25% to the historical low of 0.5%. It was the European Central Bank’s first interest rate adjustment since July 2012.
4 May 2013 The number of US nonfarm payrolls increased. Initial claims for unemployment benefits fell. Unemployment rate fell to a 4-year low. International Oil Price rose to a monthly high within 2 days.
22 May 2013 The US Federal Reserve published the new summary of policy meeting. Forex traders lowered the expectation of the size of debt purchase expectations as hinted by the US Federal Reserve. The exchange rate of USD fell across the board. International Oil Price increased 4 times on a row.
～The End～
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