In recent three months, the international oil price fluctuated and experienced trend in “W-like shape”. It dropped then rose in March, with the average value was USD47.95, which fell back for 5.3% compare with February.

The imbalance of demand and supply would stimulate a fall in oil pricein a large extent, the current supply trend as follows:

1). In March, the Asia and the US commercial crude oil stocks have reached the highest level in 80 years, stocks that include strategic reserves has exceeded 11 hundred million tons, creating a great pressure in the excess of stocks in the market.

2). The export tariff of petroleum in Russia has been greatly reduced since 1 January 2015, which drove its export quantity of crude oil directly.

3). The Saudi Arabia government has declared and insisted a constant in petroleum production policy in January 2015, maintaining drive the OPEC sustainably as production objective.

Due to the above elements, the rich supply of crude oil has weakened the ascensive force of oil price, plus, the continued demand has led to insufficient rising force of oil price:

1). The first season in Asia region refers to the peak season of monomer splitting decomposition device overhaul, reducing the demand to crude oil, it would be difficult to support the oil price in a short run.

2). The European Central Bank has launched the QE policy on schedule, which will not only inject funds of 60 billion euro until September 2016, but also emphasize the policy could possibly stimulate the growth of US dollar if it is ineffective, which would extend the duration of implementation and as a result, create obstruction in oil price increment.

To conclude, there is a lack of concrete drive in demand, while OPEC has no intention to reduce supply through losing output, plus the continued increasing oil production in the US, all these aggravate the imbalance level of market supply and demand. It is estimated that the international oil price could hardly increase in a large extent in April, and would possibly maintain between USD48 to 55.

1.2 Upstream monomers—Ready

Figure 2: Upstream monomers SM&C3(Jan-Mar2015)

Source: Chem99

Table 2：SM、C3 fluctuation(Feb-Mar2015)

	Feb 2015 average	Mar 2015 average	Mar Vs Feb 2015
SM	USD945	USD1114	↑17.9%
C3	USD818	USD981	↑19.9%

The upstream monomer has saved up strength and is ready to go in 2015 after experiencing the lowest price in the last half year in 2014. Until March, some of the monomers are increasing, Styrene (SM), Propylene (C3) and Butadiene (BD) rose around 20%.

Most of the monomers are still increasing even the oil price fell 5.3%, device overhaul has accounted for a large proportion, SM device overhaul and annual production in Asia region could reach almost 2200 thousand tons, while those of the C3 could reach 2076 thousand tons.

In March, SM and C3 has increased 17.9% and 19.9% respectively, apart from reduction of supply, the demand of downstream plastic raw material has also drove the price of monomer in a large extent.

Figure 3：Downstream demand structure of SM

Source: Chem99

The major consumption scopes of SM concentrate in EPS, PS and ABS, demand in SM total consumption capacity of these three industries accounted for 81%, EPS merely accounted for 40%.

After the prolonged New Year holiday, the downstream raw material market has followed the movement of SM and appeared to grow under the support of applied demand revival, with GPPS has increased 4.5%, ABS has increased 2.5%, and EPS, which accounted for the largest proportion, has increased 8.5%.

The demand of EPS has recovered after the New Year holiday. First, the domestic appliance industry has restored to normal production, which raised the demand of relative packaging material. Next, in terms of panel and board industry, most of the regions has loosened the combustion level of outer wall warm-keeping material to B1 level, this was regarded as a motivation for the EPS market that is able to reach B1 level of combustion ability. On the other hand, the real estate has developed and maintained the demand towards warm-keeping material in a certain extent. To conclude, the development of correlated industries has encouraged the quotations of SM in a large extent in March.

Figure 4：The WTI&C3Price Charts（2014.1-2015.3）

Source: Chem99

According to the annual figures in 2014, the movements of price of both C3 and international crude oil are basically consistent, the price of crude oil has become the direction of the C3 market trend for most of the periods in the past. However, the similarity of prices of C3 and international crude oil was not high during January to March 2015, which indicated the major affecting factor towards the C3 market refers to supply and demand.

Figure 5：Downstream demand structure of C3

Source: Chem99

In the downstream demand structure of C3, Polypropylene (PP) accounted for 60%. March is the period of concentrated overhaul for Asia C3 device, LG in Korea, Mitsui Chemicals in Japan, CPC Corporation and Formosa Plastics Corporation in Taiwan contain device overhaul as well. Yet, some of the PP chemical factories in Korea and Taiwan also has overhaul since supply is gradually reducing due to monomer overhaul, which has led to a difficulty in searching for PP, the market price is rising.

Most of the other downstream products of C3 performed well after entering the market in 2015, Epoxypropane has increased 10.4%, Propanone has increased 4.3%, and Hydroxybenzene had the greatest growth, which has reached 30.8%. The revival of downstream industry market has created a strong support towards the C3 market.

Figure 6：Upstream monomersAN、BD（Jan-Mar 2015）

Source: Chem99

Table 3：AN、BD fluctuation（Feb-Mar 2015）

	Feb 2015 average	Mar 2015 average	Mar Vs Feb 2015
AN	USD1661	USD 1494	↓10%
BD	USD640	USD800	↑24.9%

The performance of Acrylonitrile (AN) was outshining and superb in 2014, which was the only increasing product among the four major monomer raw materials, the annual growth of AN is 7.2%. However, AN was moving downward this year, along with the new production capacity of AN in some Southeast Asia regions and the continued reduction of international oil price since November 2014, the quotation of AN has appeared to fall.

Figure7：The first five countries/regionsimport origin of AN

Region	2012	2013	2014
Korea	27%	41%	30%
American	26%	22%	29%
TaiWan	22%	23%	28%
Japan	17%	8%	5%
Tailand	1%	5%	5%

China is a leading country of AN consumption, which more than 90% imports come from Korea, the US, Taiwan, Japan and Thailand. The China Ministry of Commerce and the General Administration of Custom have announced a declaration jointly, the AN is classified as Prohibited Commodities Catalogue for the Processing Trade since 1^st January 2015, the bonded policy is lost with the new regulations. The import quantity of AN contracted in China in 2015, self-sufficiency remains. Therefore, although there are parts of devices in Southeast Asia region undergo overhaul, plus the increasing price of raw material C3, the price falls with the lower demand.

In 2014, Butadiene (BD) has entered a downstream channel after a prolonged period of refusing to budge. After the New Year holiday this year, the market price of BD began to go stable and grow, which is diverse with the falling price of crude oil.

There is approximately 13% of Naphtha capacity in a ton of distillated crude oil, after Naphtha device is being decomposed, the mixed C4 hydrocarbon accounted for 10% of it, then carry out extraction of BD from the mixed C4 hydrocarbon. In this way, the proportion of crude oil in BD production is limited, BD therefore is not under control of the falling price of crude oil.

Figure 8：Downstream demand structure of BD

Source: Chem99

In the downstream demand structure of BD, Styrene-Butadiene Rubber (SBR) and Polybutene (PB) together have accounted for 64%. Along with the promotion of the new energy vehicle, the tire manufacturers is improving regarding rate of operation, demand towards upstream compound rubber is increasing gradually. During the National People’s Congress and Chinese People’s Political Consultative Congress in March 2015, the Commission of Science Technology of China expressed the retained number of the new energy vehicle has exceeded 120 thousand until the late 2014. The state council planned to launch a series of policies which enables the environmental protection industry to enter the phase of industrialization. Due to the continued increasing retained number of the new energy vehicle, the market demand towards tires is rising, which creates a support for the BD market.

1.3Plastic raw materials market—The rising tides

ABS Market Review

Figure 9：The Comparison of spot price and cost in an ABS market（Jan-Mar 2015）

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.

Table 4：ABSfluctuation（Feb-Mar 2015）

	Feb 2015 average	Mar 2015 average	Mar Vs Feb 2015
ABS	USD 1588	USD1597	↑2.5%

Ex-factory price（USD/MT）	3/Mar	6/Mar	11/Mar	16/Mar	31/Mar	Average
Taiwan Chemical Plant A	USD 1570	USD 1600	USD 1620	USD 1620	USD 1630	USD 1608

Ex-factory price（USD/MT）

2/Mar

10/Mar

23/Mar

31/Mar

Average

Taiwan Chemical

Plant B

USD 1640

USD 1680

USD 1660

USD 1680

USD 1665

In March, the ABS market first dropped then rose, which was affected by the falling monomer SM in the early days, prices fall. After the New Year holiday, some of the factory workers were not at their positions, restricting the rate of operation, with some factories which have prepared the required annual ABS raw material before the holiday, all these strike against the demand for early March, leading to a slight fall of the market price. In the late March, a lot of SM devices underwent overhaul period in Japan and Korea regions, SM began to go stable and rise, which drove the ABS market to grow.

The factory price of chemical factory in Taiwan maintained a steady and growing direction in March, which reflected that there was no pressure regarding the stocks of chemical factory, traders were facing a factory price that is higher than market price, and the supply was therefore decreasing with the reduction in stocks. Besides, since the rate of operation of downstream factories has recovered to normal gradually, and most of the factories concentrated in replenishing stocks before Qing Ming Festival and Easter holiday in April, the demand towards ABS emerged. In general, the price in March has increased 2.5% compared with the previous month.

GPPS Market Review

Figure 10：The Comparison of spot price and cost in an GPPS market（Jan-Mar 2015）

Source: HK Traders

The cost of GPPS in the graph is SM (Styrene) +US$120. It hasn’t included expenses like terminal handling charges.

Table 5：GPPSfluctuation（Feb-Mar 2015）

	Feb 2015 average		Mar 2015 average	Mar Vs Feb 2015
GPPS	USD 1138	USD 1189		↑4.5%

Ex-factory price（USD/MT）	3/Mar	6/Mar	11/Mar	16/Mar	31/Mar	Average
Taiwan Chemical Plant A	USD 1180	USD 1210	USD 1230	USD 1230	USD 1290	USD 1228

Ex-factory price（USD/MT）	2/Mar	10/Mar	23/Mar	31/Mar	Average
Taiwan Chemical Plant A	USD 1250	USD 1300	USD 1270	USD 1320	USD 1285

In March, GPPS was restricted by cost obviously, the market price was lower than the production cost for most of the time. In the mid-March, the market price fell due to two aspect: First, both the reduction of crude oil and SM have weakened the support towards raw material; Second, the GPPS raw material purchased before New Year holiday by downstream factories was yet to be fully consumed, leading to a low demand.

In general, the factory prices of chemical factories were high in March. Most of the products in GPPS used by downstream factories were relatively low in production value, the high cost would usually constrain the quantity of order received. Therefore, the demand was ordinary in March, the small quantity of production in chemical factories has created hedge with the low demand. In late-March, the market price was stable and grew under the support of the rallied SM upstream product after early fall, the average value in March increased 4.5% compared with the previous month.

PP Market Review

Figure11：The Comparison of spot price and cost in an HOMO PP market（Jan-Mar 2015）

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

Table 6：HOMO PPfluctuation（Feb-Mar 2015）

	Feb 2015 average	Mar 2015 average	Mar Vs Feb 2015
HOMO PP	USD 1202	USD1271	↑5.8%

In March, PP was out of stock. News of suspension was heard from some of the chemical factories in Taiwan and Korea repeatedly, some trademarks had vacancy in supply.

At the time that PP supply was rare in Southeast Asia region, regions like Saudi Arabia and India stopped manufacturing due to overhaul of part of the devices, plus, the sailing schedule of some loads was delayed, the supply was unstable, causing an inadequate supply of goods of traders. The market price of PP increased, and monomer C3 has been rising greatly than January and February during fluctuations in March, which has created a stronger support towards PP on cost.

One of the reasons that chemical factories suspended gradually was the large quantity of order received a year ago, current production are manufactured for fulfilling the orders previously, thus, rare new orders are made and supply are less. Since choices of trademarks that contain supply are limited, customers who have orders in hand would mostly stock up for profits. As a result, supply no longer meets demand, which drove the price of PP grow for 5.8% in the entire month.

Chapter 2: Plastic Market Forecast in 2015

2.1 Imports of ABS/PS/PP

Figure 12：Total quantity of import raw materials in South China, East China and other regions (Jan-Feb 2015)

Source: the Customs

In the proportion of four major import plastic raw materials in January and February 2015, the South China region accounted for the biggest proportion as 48%, East China region was the second as 36%. This indicated that the manufacturing industry of South China market took the first position, which was the leader towards the demand of plastic raw materials.

Figure 13：Types and quantity of import raw material in South China and East China

(Jan-Feb 2015)

Source: the Customs

In the various types of import raw material in South China and East China, PP was the first place, indicating that industry of PP material is popular and extensive, great market demand appears. Import quantity of PP in the East China region was about 24271 tons less than that of the South China region in January, yet it was about 12485 tons more than that of the South China region in February, reflecting an increasing demand towards PP in the East China region.

Figure 14：Import raw material of traders and factories in South China region

(Jan-Feb 2015)

Source: the Customs

The total quantity of import plastic raw material of factories is higher than that of traders in South China region, which indicates traders are more cautious in placing orders. Both took PP as the biggest type of import raw material, implying the potential of PP market is great, plus, the orders took by traders are not much, the upstream supply of goods is relatively less in the market.

2.2 Global economy—Hesitation

Figure 15: PMI of China, the US and Eurozone（Jan-Mar 2015）

Source: Xinhua 08

＊China Official PMI- Jointly published by China Federation of Logistics & Purchasing and the National Bureau of Statistics

＊America ISM PMI- Published by the US Institute for Supply Management

PMI figures in China, America and Eurozone vary in March, yet all of them are higher than 50, which indicates that there is hesitation in the speed of economic development of each country though they are still developing continuously. It is expected that the quotation of manufacturing industry will be ideal in April.

2.3Forecast of Plastics Market

ABS

In early April, most of the downstream factories had low rate of operation due to Qing Ming Festival and Easter holidays. Factories with stocks were not hurry in purchasing goods, part of the goods would probably become storages, and thus, the demand fluctuation was low at the beginning.

Along with the revival of smooth production in downstream corporations, customers with ordering bills would have increasing demand towards raw material quantity gradually. Some toy and hotel commodity industries showed a greater and enlarging competition in the high-end market, corporations would try to use plastic raw materials in lower price or those made in the Mainland Chinain the scope of authentication in order to replace productionfor the sake of enhancing ability of survival. Most of the industries claimed that order-taking in April would be better than that in March, the quantity of ABS was more stable and grew compared with the previous month.

ABS requires support regarding demand, it would probably follow the performance of monomer SM in terms of cost. SM has accumulated certain growth, the oil price would linger in the low level in a short run, and temporarily, there is no element that support SM to grow rapidly and continuously. Currently, under the circumstances that there is no obvious breakthrough regarding demand, chemical factories took obvious instructions in factory prices. It is expected that ABS would have certain growth in April, which would increase in mid-April obviously.

GPPS

In general, GPPS materials are required in CD tape, stationery goods and one-time utility industries. Most of the customers discussed the bills in January, the price of raw material was at the bottom, the cost of receiving orders was lower than now. There is certain growth in GPPS at the moment, it would impact the ability of the following order receive for some of the clients. Overall, demand towards GPPS was relatively stable.

Since the market demand was ordinary, traders reduced stock up, which led to few quantity of spot goods in the market. Therefore, a to-and-fro price battle was formed between weak demand and low supply.

After a period of time, plastic raw materials stocks in downstream factories were consumed. It is expected that the demand quantity in April would increase compared with March. Due to low production in chemical factories, the factory prices are high, there is greater fluctuations in GPPS in April.

In April, there will still be a difficulty in searching spot goods in the PP market probably. The supply of PP is limited, meanwhile, the date of delivery is extended, which would lead to a tense situation for most of the customers who produce materials.

The price of monomer C3 fell greatly a year ago, plus most of the cracking plants reduced their C3 production in every concentrated overhaul season, chemical factory relatively reduced or even suspended production for some of the trademarks. From the mid-April to mid-May, the SamSung PP carried out overhaul, plus the sailing schedule of loads in Saudi Arabia was unstable. As a result, it would be difficult to deal with the problem of supply fell short of demand.

It is expected that PP will control the price by quantity in April. Supply of Random PP and Block PP will be limited due to few production places, prices will greatly increase. Demand that support Homo PP will contain potential to grow due to great market usage.

Chapter 3: Summary—Forward Order-placing Scheme

The plastic raw material market has experienced the bottom quotation in the past late half year, after all, the market is now making adjustment and is always ready to rise. Some of the trademarks have suspended for a prolonged period, goods are rare to search for obviously. Along with the traditional manufacturing industry, the second season is stepping into a peak season gradually, the rising demand would probably lead to an increasing price. It is suggested that customers should grasp order-taking quantity and make a long term plan as early as possible, to purchase future goods at a current suitable price in order to strive for peaceful production with profits. For details, please contact operational department of Sunta.(Contact no.: Hong Kong 00852-25666103; Shenzhen 0755-88840920).

Chapter 4:Appendix—Major Plastics Event

5 March 2015 Libya has officially announced that she lost control towards 11 oil fields which encountered resistance, the safety of production could no longer be guaranteed.

11 March 2015 According to the U.S.Energy Information Administration (EIA), the daily production of shale oil produced by seven major shale oil manufacturers merely increased 298 tubs in April, which was the lowest single month growth since February 2011.

18 March 2015The Organization of Petroleum Exporting Countries (OPEC) report has made an optimistic analysis towards the global petroleum market, it is expected that the global daily demand will rise to 1170 thousand tubs in 2015, and half of the petroleum demand will come from China and Middle East regions.

Our Plastic Market Report is mainly to promote the market interactions among clients and provide reference information related to the market trend to clients. Also, we also pay attention to the communication and interaction between different enterprises. We welcome the enterprises which are interested in discussing the market to contact us and strive for promoting exchanges jointly. If you have any suggestions or queries, you are welcomed to contact us through:

Market Reports

The Rising Tides

Chapter 1:Plastic Market in March 2015

1.1 International Oil Price (WTI)– Ups and Downs

1.2 Upstream monomers—Ready

1.3Plastic raw materials market—The rising tides

Chapter 2: Plastic Market Forecast in 2015

2.1 Imports of ABS/PS/PP

2.2 Global economy—Hesitation

2.3Forecast of Plastics Market

Chapter 3: Summary—Forward Order-placing Scheme

Chapter 4:Appendix—Major Plastics Event

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