Factors Affecting Polyolefin Price in 2012 Chunyu Gao Senior Expert Sinopec Economics & Development...
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Transcript of Factors Affecting Polyolefin Price in 2012 Chunyu Gao Senior Expert Sinopec Economics & Development...
Factors Affecting Polyolefin Price in 2012
Chunyu Gao
Senior ExpertSinopec Economics & Development Research Institute
Polyolefin Price Trends
Factor 1: Economic Development
Factor 2: Crude Oil Price
Factor 3: Supply & Demand
Other Factors
Contents
Polyolefin Price Trends
Southeast Asia Polyolefin Market
Polyolefin price rebounded in Northeast Asia market in Q1 2012. As of end of March, the average price reached $1,400/t, which was $150/t higher than the beginning of 2012. And then in May, polyolefin price fell back as the crude oil price dropped.
700
900
1100
1300
1500
1700
1900
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
LDPE LLDPE HDPE PP PP Copolymer $/t
Polyolefin price in domestic market rebounded in Q1 2012 as well, by 500-800 Yuan/t as of end of March. Among polyolefin products LLDPE had the highest rate of price markup. Again, in May, polyolefin price fell back as the crude oil price dropped.
Domestic Polyolefin Market
8000
9000
10000
11000
12000
13000
14000
15000
16000
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
LDPE LLDPE HDPE PP PP Copolymer Yuan/t
Factor 1: Economic Development
World economy: recovery started in Q2 2012If Europe’s debt crisis continues evolving slowly, world economy growth will rise from 2.6% in Q1 to around 3.4% in Q2.
In developed world, economy growth will rise from 0.6% to 1.0%. In emerging and developing world, economy growth will rise from 5.0% to 6.0%.
World
Developed economies
Developing/emerging economies
Annualized QoQ GDP Growth
World economy: recovery goes stronger, and US recovery offsets the cumbrance from the Euro area
According to leading indicator of JP Morgan Chase, the PMI for all global sectors in February 2012 was 55.5 - the highest level since 2012 (54.5 in January) , also above the critical point of 50.
Baltic Dry Index has been climbing since early February 2012 to 30% as of March 12, which was still a low level.
All sectors
Services
Manufacturing
Baltic Dry Index
Mar 2011 May 2011 Jul 2011 Sep 2011 Nov 2011 Jan 2012 Mar 2012
Feb 3, 2012
US: growth continues in Q2 2012
Favorable factors Federal Reserve does not change
its extremely loose monetary policy Unemployment preferential policy
continues Natural gas price kept low
Unfavorable factors Europe's debt crisis gets worse Higher crude oil price Two-party politics
Driven by investment and export, US GDP growth rose from 0.4% in Q1 to 3.0% to Q4 2011.
JP Morgan Chase estimates that US GDP growth will rise from 1.5% in Q1 to 2.5% in Q2 2012.
Annualized QoQ Growth
Consumption Investment Export Import
Integrated leading indicator – US GDP
The Euro Area: recovery starts in Q2 2012, but at low speed
Favorable factors IMF will provide more relief funds
to Greece ECB will keep its loose monetary
policy Governments and banks will
provide more support to recovery
GEP growth dropped from 2.4% in Q1 to 0.7% in Q4 2011. Negative growth was observed in consumption, and import growth went down to a low level.
Unfavorable factors Financial pressure leads to fiscal
austerity, which will restrain consumption
Leading banks lack credit strength Possibility of Sovereign debt crisis
going worse
The European Commission estimated on Feb 23 that GDP in the Euro area will shrink by 0.3% in Q1 2012.
Germany: 4.6% in Q1 to 2.0% in Q4; France: 2.2% to 1.4%; growth was still positive in Spain but negative in Italy; recession continued in Greece, Ireland and Portugal.
QoQ Growth
Consumption
Investment
Export
Import
France
ItalyGermany
Portugal
Greece
Spain
Ireland
QoQ Growth
BRICS: growth slowdown continues in 2012
Unfavorable factors Central banks hesitate in raising or
even cut interest rate, stimulating capital investment
Governments will keep expanding fiscal expenditures
Favorable factors Currency appreciation pressure and
weakened demand from main economies keep slowing down export growth
Inflation pressure Extremely loose monetary policies of
developed economies cause instability to BRICS’ financial markets
India: GDP growth dropped from 7.3% in Q1 to 6.5% in Q4 2011; Brazil: 4.1% to 1.4%; Russia: rose from 3.8% in Q1 to 4.9% in Q3.
QoQ GDP Growth
Brazil
India
South Africa
China
Russia
OECD Leading Indicator - BRICS
Brazil
India
South Africa
China
Russia
50.551
35
40
45
50
55
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2007 20082009 20102011 2012
%PMI
China: economic growth slows down in a steady manner in 2012
GDP growth in Q1 was 8.1% - the lowest in recent three years GDP growth slowed down quarter by quarter since 2011
Manufacturing PMI bounced recovered in March 2012 PMI climbed to 53.1% from 51.0% in the last month - the growth has lasted for four
months. Meanwhile, HSBC PMI was 48.3% in March - higher than February but still
depressive
PMI in Feb was the lowest since 2006 (except 2009)
4
5
6
7
8
9
10
11
12
13
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
%
23.821.5
22.5
23.2
-40
-20
0
20
40
60
80
100
120
20
24
28
32
36
40
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
固定资产投资同比增速(左)新开工项目投资同比增速(右)
% %
Investment growth will slow down slightly
Favorable factors Implementation of New 36 will facilitate private investment in
railway, civil, finance, energy, social undertakings and other sectors
Q2 is a busy season, and investment in newly-commenced projects will show steady growth
Investment in affordable housing and agricultural infrastructures
Investment in industrial projects in middle and western regions
Unfavorable factors China failed to meet the goals set for energy consumption,
carbon dioxide emission and nitrogen oxide emission in 2011, so the development of industries with high energy consumption will be further restricted in 2012
Many of the loans made through local financing platforms will mature in 2012, and local governments will face huge financial pressure
Growth of investment in manufacturing and infrastructure will slow down
-20
-10
0
10
20
30
40
50
60
70
80
2008
-02
2008
-04
2008
-06
2008
-08
2008
-10
2008
-12
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
制造业交通运输、仓储和邮政业水利、环境和公共设施管理业房地产业
%
投资累计同比(分行业)
Newly-commenced projects grew by 23.2% in January and February, and growth was 0.7% higher than last year
Investment growth in Q1 2012 was 20.9%, which was 2.9% lower than that of 2011
YoY Growth: Investment (left)YoY Growth: Newly-commenced projects (right)
ManufacturingTransport, warehousing and post servicesWater conservancy, environment and utilitiesReal estate
YoY Growth of Investment in various sectors
17.1
14.7
0
5
10
15
20
25
0
40000
80000
120000
160000
200000
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
社会消费品零售总额:累计值社会消费品零售总额:累计同比
亿元
%
Favorable factors Consumption stimulating policies
- Paid vacations, consumer credits and preferential policy for first-time home buyers
- E-commerce realized a total turnover of 780 billion Yuan in 2011, and new consumption modes including online shopping will be further promoted in 2012
- Production and supply of energy saving products will be enhanced to benefit more people
Improvement of consumption environment and consumption capacity
- Household registration reform will be quickened to attract more eligible rural population to settle down in middle- and small-size cities
- SMB facilitating policies will help improve employment and then increase consumption
Unfavorable factors Potential price increase
- According to the government's work report, the CPI goal is set at 4%, which was higher than the CPI goals (average 3.7%) and actual inflations (average 3.1%) of previous years since 2005
- Other factors driving inflation such as increasing labor cost and climbing oil price
Automobile and housing consumption cooled down
4.5
3.2
-4
-2
0
2
4
6
8
10
20
07
-02
20
07
-05
20
07
-08
20
07
-11
20
08
-02
20
08
-05
20
08
-08
20
08
-11
20
09
-02
20
09
-05
20
09
-08
20
09
-11
20
10
-02
20
10
-05
20
10
-08
20
10
-11
20
11
-02
20
11
-05
20
11
-08
20
11
-11
20
12
-02
%
CPI同比
YoY growth of total retail sales of consumer goods in Q1 was 14.8% - the lowest level since 2007
Consumption will grow at a lower speed
Total retail sales of consumer goods: cumulative valueTotal retail sales of consumer goods: YoY growth
100
mill
ion
Yua
n
CPI: YoY Growth
156.7
24.5
-40
-20
0
20
40
60
80
100
120
140
160
0
30
60
90
120
150
180
210
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
汽车销量:当月值(左) 汽车销量:当月同比(右)
万辆
%
Regulation and control on real estate continues- Total real estate sales dropped by 14.0% in January
and February, and this was the first time negative growth showed since 2010
- Normalized interest rate for first-time home buyers will stimulate rigid demand Car sales will grow but slowly
- Car sales dropped by 6.0% in January and February- Rigid demand still exists, and purchase of school bus
will increase Sales of household appliances will fall
- Sales of household appliances decreased by 2.9% in January and February, and it was the first time the growth turned negative since March 2009
- Appliance trade in and appliances going to the countryside ended in late 2011, but new stimulating policies are not in place
Sales volume in February grew fast because of the different number of effective working days due to Chinese New Year
4.9
-14.0
16.2
5.1
-40
-20
0
20
40
60
80
100
0
5000
10000
15000
20000
25000
30000
2009
-02
2009
-05
2009
-08
2009
-11
2010
-02
2010
-05
2010
-08
2010
-11
2011
-02
2011
-05
2011
-08
2011
-11
2012
-02
商品房当月销售面积(左)商品房销售面积累计增速(右)房屋新开工面积累计增长率(右)
万平方米
%
-2.90
12.80
-5
0
5
10
15
20
25
30
35
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
家用电器和音像器材类:累计同比服装鞋帽针纺织品类:累计同比
零售额%
Consumption will grow at a lower speedReal estate sales per month (left)Growth of real estate sales (right)Growth of newly-commenced housing projects (right)
10,0
00 m
2
Car sales per month (left) YoY growth (right)
Retail Sales
Household appliances and A/V equipment:
YoY growthKnitwear and textile: YoY growth
-60
-40
-20
0
20
40
60
80
100
-400
-300
-200
-100
0
100
200
300
400
500
2008
-02
2008
-05
2008
-08
2008
-11
2009
-02
2009
-05
2009
-08
2009
-11
2010
-02
2010
-05
2010
-08
2010
-11
2011
-02
2011
-05
2011
-08
2011
-11
2012
-02
贸易顺差:当月值出口金额:累计同比进口金额:累计同比
亿美元 %
Trade surplus in Q1 was only $670 million
Export growth in Q1 was 7.6%, import growth 6.9%, both were the lowest in recent years (except 2009)
Export environment is extremely harsh - Europe's debt crisis will continue to impact
external demand- Emerging economies cool down - Trade friction between China and US may
intensify during in the election year- Increasing labor cost, RMB appreciation, unstable
international environment, etc. will increase export cost
- No sign of improvement is seen in general operation of SMB, making stabilization of export more difficult
48.8
49.6
40
45
50
55
60
2008
-02
2008
-04
2008
-06
2008
-08
2008
-10
2008
-12
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
汇丰中国PMI
%景气临界线
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2008
-02
2008
-04
2008
-06
2008
-08
2008
-10
2008
-12
2009
-02
2009
-04
2009
-06
2009
-08
2009
-10
2009
-12
2010
-02
2010
-04
2010
-06
2010
-08
2010
-10
2010
-12
2011
-02
2011
-04
2011
-06
2011
-08
2011
-10
2011
-12
2012
-02
日本欧盟美国东盟
%
出口(分经济体)累计同比
China’s export to US, EU, Japan and ASEAN recovered in February
Trade surplus per month Export value: YoY growthImport value: YoY growth
$100
mill
ion
JapanEUUSASEAN
YoY export growth of various economies
HSBC China PMI
Prosperity Threshold
Export growth slows down, but may recover in the 2nd half
Factor 2: Crude Oil Price
18
Process flow of petrochemical productsIntermediate
productsMonomers &
polymersSynthetic
resinSynthetic
fiberSynthetic
rubber
Naphtha
Light diesel oil
Others
Pyrolysis gasoline
Naphtha
Mixed xylene
Others
Eth
ylen
e cr
acke
rA
rom
atic
s un
it
Coal
Residue oil
Natural gas
Deoiled asphalt
Ethylene
Propylene
Butadiene
Acetic acid
Vinyl acetate
Phenol/Acetone
Butanol/octanol
Styrene
Benzene
Toluene
P-xylene
Glycol
Polyvinyl alcohol
Acrylonitrile
Caprolactam
Polyester
HP polyethylene
LP polyethylene
Linear LD polyethylene
PVC
PVA
Acrylic
PPPolypropylene
PolystyreneStyrene-butadiene rubber
Butadiene rubber
Butyl rubber
Nylon
Terylene
Synthetic ammonia
Urea
Crude oil price in international market was volatile and reached new high level in Q1
Crude Oil Price 2011-2012
$/bbl Q1 2012
Average YoY Chain Rate Brent Spread WTI 102.93 9.4% 9.4%
-15.4Brent 118.35 12.5% 8.6%
Dubai 115.86 15.6% 10.5% -2.5
1. US launched financial sanction against Iran;
2. S&P lowered credit rating of 9 countries in
Euro area;
3. Cold weather in Europe drove the demand for
heating oil;
4. Greece almost reach at a salvage agreement;
5. Iran refused inspection by IAEA;
6. High crude oil challenged world economy;
7. Natural gas leak in North Sea;
8. US and EU discussed about releasing
strategic reserve.
$/bbl
Brent-WTI spread
WTI Brent Dubai
World Crude Oil S&D million bbl/day
Source: Adapted from IEA data, April 2012.
Shortage of global oil supply will reach 400,000bbl/day in Q3 2012 due to uncertainties in S&D and limited production increase by OPEC.
2010 2011 2012
Annual Annual Q1 Q2 Q3 Annual
OECD 46.0 45.4 45.3 44.2 45.4 45.1
Non-OECD 41.9 43.3 43.6 44.4 45.1 44.4
Total demand 87.9 88.7 88.9 88.6 90.1 89.5
Non-OPEC 52.0 52.1 52.6 52.3 52.8 52.8
OPEC 34.7 35.7 37.3 37.0 36.9 37.0
Crude oil 29.4 29.9 31.2 30.8 30.4 30.7
Condensate 5.3 5.8 6.1 6.2 6.5 6.3
Total supply 86.7 87.8 89.9 89.3 89.7 89.8
Gap -1.2 -0.9 1.0 0.7 -0.4 0.3
Forecast on Crude Oil Price in Q2/Q3 2012
Q2 2012 Q3 2012
Forecaster Brent WTI Brent WTI
Barclays 118 104 121 107
Credit Suisse 124 110 128 118
FirstEnergy 121 105 119 107
Citibank 117 104 113 103
Merrill Lynch 122 106 117 106
BNP Paribas 119 105 117 105
JP Morgan Chase
112 103 120 114
Goldman Sachs 120 114 120 115
Societe Generale
128 116 135 127
BPI 122 103 126 105
Average* 119 105 117 107
Cambridge Energy
122 105 120 107
2009-2012 年分季度国际原油价格及价差
Latest trends in crude oil market: Elections in France and Greece affect
the Europe’s debt crisis; Recession in the Euro area leads to
low oil demand; OPEC increases its production to a
record high level; USD appreciates quickly; Oil price fall back quickly due to
concentration of previously covered risks.
Brent crude oil price in Q2 is estimated at $115/bbl.
World economic recovery continues, oil demand grows in terms of both YoY and
chain rate; Uncertainties in oil supply increase due to hurricane season and maintenance of
refineries; Gap in supply still exists, as OPEC reduces its production to the level of 2007; USD turns weak, low interest rate and high debt ratio increase cash flow. Generally
the YoY growth will remain unchanged, and chain rate growth will rise..
Average price of Brent crude oil in Q3 2012 is estimated between $115 and
$119/bbl.
Notable trends in Q3:
$/bblBrent-WTI spread $/bbl
Brent
Factor 3: Supply & Demand
China's PE production declined in Q1, while PP production increased slightly, but demand growth kept falling; LLDPE price rose and other polyolefin products lowered, gross margin was relatively stable.
In Q1 2012, domestic PE production was 2.63 million tons, PP 2.84 million tons, YoY growth - 3.2% and 6.5% respectively.
PE import grew while PP import fell. Apparent consumption: PE 4.5 million tons
and PP 3.76 million tons, YoY growth 0.5% and 3.5%. Consumption growth dropped 0.3% and 4% respectively.
In Q1 2012, polyolefin price rebounded in domestic market, especially LLDPE and PP. But the quarterly average prices generally fell except LLDPE.
Gross margin was relatively stable, but still below break-even point.
2010-2012 年聚烯烃逐季表观消费量
聚烯烃价格走势图
-5%
0%
5%
10%
15%
20%
25%
30%
0
100
200
300
400
500
600
2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1
聚乙烯 聚丙烯 聚乙烯同比 聚丙烯同比
8000
9000
10000
11000
12000
13000
14000
15000
Jan-
10
Feb-
10
Mar
-10
Apr
-10
May
-10
Jun-
10
Jul-1
0
Aug
-10
Sep-
10
Oct
-10
Nov
-10
Dec
-10
Jan-
11
Feb-
11
Mar
-11
Apr
-11
May
-11
Jun-
11
Jul-1
1
Aug
-11
Sep-
11
Oct
-11
Nov
-11
Dec
-11
Jan-
12
Feb-
12
Mar
-12
LDPE LLDPE HDPE PP万元PE PP PE growth PP growth 10,000 Yuan
Polyolefin market demand will drop in Q2. However, limited domestic production and maintenance of ethylene units in Southeast Asia may drive the price to climb and the gross margin to cover.
Polyolefin demand in domestic market is estimated to drop in Q2: PE falls by 2.3%, PP 4.3%. Capital supply is still right, and more units
in neighboring countries/regions will be shut down for maintenance in Q2, leading to lower stock.
Domestic petrochemical companies will continue limiting production.
Apparent Quarterly Polyolefin Consumption 2010-2012
Polyolefin price may rebound in Q2;
Gross margin will be better, but still around break-even point.
2000
3000
4000
5000
6000
7000
8000
Jan/11
Feb/11
Mar/11
Apr/11
May/11
Jun/11
Jul/11
Aug/11
Sep/11
Oct/11
Nov/11
Dec/11
Jan/12
Feb/12
Mar/12
Apr/12
May/12
Jun/12
元/吨
LDPE-石脑油 LLDPE-石脑油
HDPE-石脑油 PP-石脑油
Gross Margin of Polyolefin
0
100
200
300
400
500
600
2010 Q1 2010Q2 2010 Q3 2010Q4 2011 Q1 2011 Q2 2011Q3 2011 Q4 2012Q1 2012Q2
PE PP10,000t
Yuan/tNaphtha
Naphtha
Naphtha
Naphtha
Number of Futures warehouse receipts registered with DCE declines since April
End of March is the time for re-registration of futures warehouse receipts specified by DCE.
Beginning in April, fewer new warehouse receipts were registered, and total number as of May 10 was only 4,276 contracts.
8000
9000
10000
11000
12000
13000
14000
0
10000
20000
30000
40000
50000
60000
4-Jan4-Feb4-Mar 4-Apr 4-May4-Jun 4-Jul 4-Aug4-Sep4-Oct 4-Nov4-Dec 4-Jan4-Feb4-Mar 4-Apr4-May
Warehouse Receipts
Closing priceContracts Yuan/t
Other Factors
Olefin price
Changes in stock level
Export factor
Monetary policies
US and EU’s sanctions against Iran may force Iran to increase its export to China, resulting in smaller spread between LLDPE and LDPE
US and EU’s sanctions against Iran and Iranian central bank have changed China’s PE import by the end of 2011;
Substantial price cuts by Iran and domestic barter trade will increase PE import volume from Iran;
More cheap PE from Iran will be imported, and may cause disorder in domestic market.PE Import from Iran 2011-2012
Iranian PE makes up about 10% of China’s total PE import, including LDPE (20%) and HDPE (10%). The price difference between LDPE and LLDPE will be narrower in Q2.
0
1
2
3
4
5
6
7
8
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
LDPE HDPE LLDPE万吨10,000t
Thank You!