In June, the international oil price has increased 0.9% compared with that in May. The major factors that supported the growth of the oil price are as follows:

The Gulf of Mexico, America, was attacked by rainstorm, leading to the evacuation of operating staffs in some petroleum corporations in that region. This region refers to the concentration of crude oil production in the US, which is also an important import port in the US. Therefore, the occurrence of rainstorm had great influences towards crude oil production, crude oil imports, as well as extracted oil.

Until mid-June, the US gasoline demand has reached the highest level since 1991, while the refined oil demand has also achieved the highest level since 2007. The seasonal growth of both the US gasoline and refined oil have motivated the price of crude oil indirectly.

The above factors have facilitated the growth of the oil price, yet the growth was relatively fine, which was due to the constraints towards the oil price from the following factors:

The debt crisis in Greek was regenerated, the country has carried out capital control and closed the banks. Investors were worried about Greek will be exiting the Eurozone with breaking debts. This would threaten the stability of the financial system in the Eurozone, and trigger an entire market turbulence.

The Iran problem was concerned in the market, it is expected Iran could reach the nuclear agreement. This could possibly lead to larger capacity of crude oil for the market as a result, which would further compress the petroleum market.

The above factors caused the fluctuation of the oil price at USD60, there were difficulties in both rise and fall, and this could hardly be tackled.

1.2 Upstream Monomers – Butadiene shows off

Figure 2: Upstream monomers SM&C3(Apr-Jun2015)

Source: Chem99

Figure 3: Upstream monomers AN&BD(Apr-Jun2015)

Source: Chem99

Table 2：SM、C3、AN、BD fluctuation(May-Jun2015)

	May 2015 average	Jun 2015 average	Jun Vs May 2015
SM	USD1366	USD1305	↓4.5%
C3	USD974	USD947	↓2.8%
AN	USD1427	USD1354	↓5.1%
BD	USD1075	USD1303	↑21.1%

The major upstream monomer has reduced much and increased less in June. Styrene (SM), Propylene (C3) and Acrylonitrile (AN) had 4.1% average reduction. Butadiene (BD) showed off, it greatly rose 21.1%.

Table 2：BD device overhaul in Asia (except China) in 2015

Country/Region	Corporation	Planned time of stoppage	Period	Production capacity (million tons)
Korea	Samsung Total	Mid-April	40days	12
Korea	Korea YNCC	Mid-May	30days	24
Singapore	Petrochemical Corporation of Singapore (PCS)	Late-May	15days	10
Taiwan	Formosa Petrochemical Corporation (FPCC)	9^th June	40days	10.9
Indonesia	Chandra Shekhar	3^rd June	20days	10
			Total	66.9

Source: Chem99

To conclude, the prices of the upstream monomer SM, C3 and AN fell and then back under the situation of loose supply and stable demand. BD had an obvious supply shortage in June, the price went high since supply did not meet demand.

1.3 Plastic Raw Materials Market – Constantly changing conditions

ABS

Figure 4：The Comparison of Spot price& Cost& in an ABS market（Apr-Jun 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：ABS fluctuation（May-Jun 2015）

	May 2015 average	Jun 2015 average	Jun Vs May 2015
ABS	USD1717	USD1643	↓4.3%

In June, the changes of trend in the ABS spot goods market was relatively quick, the overall price was stable with reduction. The market price went close with the production cost since mid-June.

At the beginning of the month, there was an ABS chemical factory in Taiwan reduced the factory price to USD70, which led to a further drop of the market with stable demand.

Although the factory price went low, it was still lower than the cost at that period, which indicated that the reduction of the factory price has reached the maximum limit in a certain extent.

Since ABS was positioned as market crash in late-May, the agents have yet to prepare large amount of later goods, they presold some orders as well. Therefore,apart from paying early orders, there were not much spot goods in the market, which relieved the reduction of ABS.

GPPS

Figure5：The Comparison of Spot price &Cost in an GPPS market（Apr-Jun 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：GPPS fluctuation（May-Jun 2015）

	May 2015 average		Jun 2015 average	Jun Vs May 2015
GPPS	USD1349	USD1402		↑4.0%

In June, GPPS slightly went high, the average value has risen 4.0% compared with the previous month, which was diving from a high peak in May.

The major reason that helped increasing GPPS was tense and lacking of supply. In recent two months, most of the GPPS chemical factories in Taiwan had high factory prices, which has built pressure on costs of preparing stocks towards some traders. Besides, it was difficult to search for a shining spot at the end of demand, most of the traders tended to prepare stocks cautiously.

The slight growth of GPPS was mostly due to restrained demand, instead of rich and adequate supply. Types of spot goods are reducing gradually along with the saturated goods which reached clients’ target prices. The market price is becoming more stable step by step, which finally increased the average value of June.

Figure 6：The Comparison of Spot price &Cost in an HOMO PP market（Apr-Jun 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 terminalhandling charges.

Table 6：HOMO PP fluctuation（May-Jun 2015）

	May 2015 average	Jun 2015 average	Jun Vs May 2015
HOMO PP	USD1432	USD1386	↓3.2%

According to the HOMO PP trend in recent three months, the price of spot goods market was higher than the production cost for a relatively large distance, which also provided spaces for PP’s reduction.

The major reason that supported the market price of PP to go high for a prolonged period was tense and lacking of supply. In June, due to continuous replenishing supply in Saudi, PP chemical factories have reduced factory prices in order to enhance competitiveness.

The end demand had small fluctuation during traditional peak period, and thus, the PP market was stable with reduction under lacking of strong and powerful motivation. In June, the price was reduced for 3.2% compared with the previous month.

Chapter 2: Plastic Market Forecast in July 2015

2.1 Imports of ABS/PS/PP

Figure 7：Type and capacity of import raw material in South China, East China and other regions (Jan-May 2015)

Source: the Customs

From January to May 2015, the largest import capacity of plastic raw material was in South China region, the import type was PP in major. This reflected that the proportion of plastic raw material usage in South China region has taken a leading position; the demand in the overall market was huge.

Figure 8: Import raw material fluctuations in South China, East China and other regions (Jan-May 2015)

Source: the Customs

In April and May, the import capacity of plastic raw material in South China and East China had decreasing trends, which implied that the demand capacity towards raw material at the current traditional peak season was not considerable, while the export capacity of raw material from chemical factory to other regions was increasing.

Figure 9：Types and capacity of import raw material fluctuations in South China, East China and other regions (Jan-May 2015)

Jan Feb Mar Apr May

In recent two months, the total import capacity of PP had a relatively large reduction among the import plastic raw materials in South China region. The fluctuations of ABS, GPPS and HIPS were unobvious.

The reduction of import capacity of PP reflected that the market demand fell and then back. It is estimated that the market price of PP will encounter a risk of reduction in a short run.

2.2 Global Economy – Slow development

Figure 10: PMI of China, the US and Eurozone（Jan-Jun 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

The PMI in China, America and the Eurozne performed well in June, implying that the market trend was still optimistic. In a short run, the fluctuation of the market consumption power will not be great, which was a good trend fo export corporations.

2.3 Forecast of Plastics Market

ABS

With the coming of the third quarter, there were continuous variations in corporations which adopt ABS raw material in major in terms of the prosperous level. A lot corporations “cornered”; while some large and capable factories had great ordering capacities; and some small and medium-size factories had reduction in ordering capacity compared with the same period in the previous year.

The Greek debt law-breaking has influenced the economy of the Eurozone deeply. Affecting by the uncertain direction of the Europe economic develop, some toy clients claimed that order-receiving would reduce, and some clients mentioned that orders in hand of the lower-half year was half of that of the upper-half year. The usage of ABS raw material would relatively reduce.

Meanwhile, particular clients would first order semi-products and wait for upstream clients to take orders. Yet, if the Europe economy is still poor, order-receiving will be gone and corporations will encounter a risk of semi-products detaining.

In general, the ABS market demand in July will stable in most of the time with a falling trend. This would build pressure in the market price trend of ABS, and it may possibly lead to a slight decrease in the market price.

GPPS

Since GPPS was affected by the decreasing monomer SM, the market trend could hardly rise. In recent two months, the factory price of chemical factory was higher than the production cost for a relatively large distance, traders would face a high replenishing costs, as well as a risk of unsaleable goods due to poor demand, and therefore stock up conservatively based on clients’ pre-orders.

For those corporations which use GPPS raw material for production, the increasing cost would restrain the order capacity. Take plastic fork and knife industry as an example, the orders were calculated by tons due to low profit margin of product, the orders were greatly influenced by the cost. Some clients claimed that the demand in July was 10-20% lower than that in June.

Most of the GPPS trademarks which were constrained by demand had places for reduction then back in July, the price of specific particular trademark could possibly be stable due to the support of tense supply.

In recent two months, the price of the upstream monomer C3 of PP had no huge fluctuations, in general, the production cost was lower than the market price in a relatively large distance.

The toy industry refers to one of the industries that uses relatively much PP capacity. Some toy clients carried out orders for Halloween and Christmas in July, the demand was similar as in June. However, the local market has different consumption power due to unstable development of Europe economy. This has led to a lower order capacity in July compared with the same period in the previous year in some baby product industries.

Some domestic appliance clients claimed that the demand towards export market goods has increased, some goods has reached the food level, and therefore increased the usage of PP during production.

The DVD tape industry also requires traditional PP materials, most of the clients reflected that it would be difficult for corporations to survive in the current situation. This industry does not contain an obvious low and peak season. Currently, the proportions of gaming tapes accounts more while that of audio and video accounts less.

In general, the market price of PP has potential fall back spaces with smooth supply in July.

Chapter 3:Summary - Adjustment

In July, the plastics raw material market took the adjusting quotations in majority. Under such circumstances, some of the trademark markets would lower the quoted price. It is advised that customers should consider the quantity of actual orders, taking orders at an earlier period could guarantee production, or release the goods in a balanced manner according to production demand.

Chapter 4: Appendix-Major Plastics Event

9 June 2015 In May, China had 23240 tons of import crude oil, which has dropped almost 26% than in April, while falling for about 11% than the same period in the previous year. This was the greatest reduction since November 2013.

15 June 2015 Since the profit rate of SM was relatively high, raw material was replaced by LPG in some of the cracking devices, which reduced the production capacity of BD.

17 June 2015 Due to the occurrence of tropical cyclones along the coast in Gulf of Mexico, some petroleum corporations in that region have evacuated the operating staffs, the production capacity of crude oil will be affected.

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

Constantly Changing Conditions

Chapter 1: Plastic Market in June 2015

1.1 International Oil Price (WTI) – Difficulties in both rise and fall

1.2 Upstream Monomers – Butadiene shows off

1.3 Plastic Raw Materials Market – Constantly changing conditions

Chapter 2: Plastic Market Forecast in July 2015

2.1 Imports of ABS/PS/PP

2.2 Global Economy – Slow development

2.3 Forecast of Plastics Market

Chapter 3:Summary - Adjustment

Chapter 4: Appendix-Major Plastics Event

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