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ISSUE NUMER: 057 7th Mar, 2013

RAW MATERIAL………………………………………………………… (Page 1-8)

Calcium carbide EDC VCM Ethylene

POLYVINYL CHLORIDE ……………………………………………… (Page 9-16)

Domestic market Import market Export market Production news Forecast


Calcium carbide

DOMESTIC CARBIDE MARKET

Region FD price (RMB/mt)

Market movement Feb.

Four weeks ago

E.China 3500-3650 3500-3650 Market in East China did not change much during last month and the sluggish downstream market was dragging the carbide industry down, although buyers were showing better interests.

N.China 3200-3550 3250-3520 Market in North China ran flat during last month, while high-end prices were picked up because of transportation issues. Local prices were pushed down by PVC producers, though.

C.China 3250-3500 3250-3550

Carbide market in Central China did not change much, while the high-end prices were pressed to lower. There were still new plants established. Traders and downstream buyer showed little purchase interest.

RAW MATERIAL


EDC

In Jan 2013, there was 65177 tons import EDC arriving in China, with a slight decrease compared to last month and traders were holding positive attitudes toward later market although current price is still running higher. Expected supply will be shrinking as former.

EDC market in Asia was running straightly firmer during last month and the atmosphere was still cold. Prices were heard higher to around USD 385-390/mt CFR Fareast and transactions were mainly heard USD 5/mt lower than offers. Products from US were heard offered higher to USD 330/mt FOB for Feb-Mar shipment cargoes. As the economic environment was still fluctuating, buying and selling ideas were still cautious. Chlor-alkali companies were still showing steady interest in

making purchases, for the reason that PVC market showed slight rebound last week. Domestic EDC price went better along with warmer demand from solvent market. Prevailing price was higher at around CNY 3500-3550/mt.

Domestic EDC Bids in Feb of 2013 (RMB/mt)

Beginning of Feb Middle of Feb End of Feb

E. China 3250-3300 3500-3550 3450-3500

S. China 3450-3500 3650-3700 3650-3700

CHINA EDC IMPORTS IN JAN 2013

Customs Volume Sum Value

Tons USD

Tianjin 40213.908 10955310

Shanghai - -

Ningbo - -

Shenzhen - -

Nanjing 24963.719 7005382

Total 65177 17960692

Volume and Average Price of China Imported EDC

CHINESE EDC IMPORTS

From Jan 13 Dec 12

Jan-Dec 12

Tons Tons Tons

Japan 4810

Saudi Arabia 15684

S. Korea - 8792 103190

Taiwan 36300

United States 60427 49830 303913

Iran 11327

Indonesia 4750 19255

Brazil 12791

Spain - 10396 10396

Total 65177 69018 517666


Note: Average prices of Import EDC is calculated with volume and sum

VCM

In Jan 2013, total VCM imported volume was 45232 tons, keeping basically stable compared to last month; still at lower level compared to last year. Main reason for the sluggish was the tight supply from Japan and there will be fewer traders doing the business.

VCM offers moved impressively higher again during last month and the supply was still tight. Prevailing offers for NEA products was

heard slightly firmer to around USD 940-970/mt CFR for Mar. shipment cargoes and producers would like to hold the price at higher level. Last week, transactions were heard higher to around USD 920-930/mt CFR China. Traders expressed that they are still short of products. Later supply would still be quite tight, and the price may still go high. Offers from US Gulf were heard steady to higher around USD 810/mt FOB, keeping stable with the beginning of Feb. But the PVC market was still quite sluggish due to weak demand for plastic products.

CHINESE VCM IMPORTS

From Jan 13 Dec 12

Jan-Dec 12

Tons Tons Tons

S. Korea 6953 4497 58,113

Japan 32739 25829 284,891

Taiwan 5540 15120 224,826

Other 5000

Total 45232 45446 572,830


Malaysia’s Petronas closed its 440,000t/a VCM plants and caused much impact to the vinyl material market.

VCM & EDC DOMESTIC AND IMPORT NOMINATION FOR FEBRUARY, 2013

Domestic bid

(RMB/mt)

Import bid

Nomination (USD/tonne)

Conclusion Price (USD/tonne)

EDC 3450-3500 395-400 CFR 375-390 CFR

VCM 6500-6600 940-970 CFR 880-930 CFR

CHINA VCM IMPORTS IN JAN,2013

Customs Volume Sum Value

Tons USD

Tianjin - -

Shanghai - -

Nanjing 13471.158 10801206

Ningbo 10748.297 8765231

Qingdao - -

Guangzhou 21012.538 16685920

Total 45232 36252357


Volume and Average Price of China Imported VCM

Note: Average prices of Import VCM is calculated with volume and sum

Import VCM calculated from General Trade.

Ethylene

CHINA ETHYLENE PRODUCTION OUTPUT, EXPORT AND IMPORT, MT

Output Export Import Apparent

consumption

10-Jan 947,023 70 71,434 1,018,387

10-Feb 916,156 14 65,697 981,839

10-Mar 975,121 3 72,393 1,047,511

10-Apr 1,079,693 1,602 66,215 1,144,306

10-May 1,065,643 3,906 70,959 1,132,696

10-Jun 1,040,787 0.001 52,767 1,093,554

10-Jul 1,166,743 3 64,502 1,231,242

10-Aug 1,375,995 3,231 67,376 1,440,140

10-Sep 1,227,710 0.001 74924 1,302,634


10-Oct 1,340,519 5,903 63927 1,398,543

10-Nov 1,290,712 0 56,767 1,347,479

10-Dec 1,234,424 9283 88,445 1,313,586

11-Jan 1,347,018 74 106,812 1,453,765

11-Feb 1,253,916 9283 88,445 1,333,078

11-Mar 1,356,109 3004 79,202 1,432,307

11-Apr 1,307,089 3011 54,469 1,358,547

11-May 1,319,374 - 69,397 1,388,771

11-Jun 1,220,361 6 86,226 1,306,581

11-Jul 1,300,357 3 86,894 1,387,248

11-Aug 1,183,510 3 102,214 1,285,721

11-Sep 1,060,671 1 79,760 1,140,430

11-Oct 1,058,576 1 87,903 1,146,478

11-Nov 1,065,748 - 98,364 1,164,112

11-Dec 1,346,107 70 105,536 1,451,573

12-Jan 1,267,323 - 107,869 1,375,192

12-Feb 1,335,121 - 114,784 1,449,905

12-Mar 1,295,543 - 102,679 1,398,222

12-Apr 1,215,709 97,778 1,313,487

12-May 1,266,684 105,569 1,372,253

12-Jun 1,182,332 - 107,304 1,289,630

12-Jul 1,198,049 - 95,137 1,293,186

12-Aug 1,165,398 - 126,471 1291869

12-Sep 1,109,840 - 147302 1257142

12-Oct 1,271,637 - 134411 1406048

12-Nov 1,298,569 144654 1443223

12-Dec 1,329,160 3 138515 1467672

0

20

40

60

80

100

120

140

160

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Ethylene Polyethylene PVC

Output of Ethylene and its Ramification PE/PVC in 2012unit:10kt

Domestic market

Region prevailing price RMB/mt Market movement

E-route four weeks

ago C-route

four weeks ago

S.China 6800-7120 6700-6950 6500-6600 6500-6600

PVC market in S.China did not change much during last month; Prices for ethylene based PVC was obviously picked up, while for acetylene based products it kept steady. The players were not willing to make big moves shortly after the Spring Festival.

N.China 6650-6900 6550-6720 6270-6480 6270-6480 PVC market in North China kept steady during last month. Although part of producers insisted their offers, the market was not picked up as demand was quite sluggish. End-products were not sold well.

E.China 6700-7150 6670-6950 6430-6520 6430-6520

The acetylene-based PVC market in E. China behaved quietly sluggish during last month, while ethylene based products were offered higher. Traders started to speculate the market; but downstream players were not willing to make fresh purchases.

NW.China 6050-6200 6050-6170 PVC plants in Northwest China kept their facilities running at normal operation rates, while inventory pressure was great. Major producers all hold their offers, waiting for the demand to pick up.

NE.China 6850-7000 6700-6900 6450-6530 6450-6530 Demand for PVC went basically stable in NE. China. Products from surroundings poured in, and the prices were slightly picked up.

SW.China 6400-6550 6370-6550 Although PVC market in Southwest China mainly kept stable last month, the spot market was not as ideal as it should be. Buying interest in this area is still thin.

C.China 6380-6480 6380-6480 PVC market in C. China went continuously flat during last month. Transaction was still not good and producers were running with lower operation rates.

POLYVINYL CHLORIDE


Import Market

International PVC market kept stable to higher during last month and imported offers from US were heard stable at USD 900-970/mt FOB and the predict offers will be USD 110/mt higher. SEA and India see better prospect toward later market and the import price was pulled up by traders to USD 1040-1070/mt CIF. PVC price in Vietnam was offered stable to higher at around USD 1080-1090/mt FD for K67-68 products as expected. Downstream companies were willing to make fresh purchases as later supply may be tight from shutdowns. PVC market in Indonesia was running unsatisfying while the price was offered higher to USD 1080-1100/mt CFR for the reason that supply was a little tight. Market in India showed softness during the last week. Prevailing offers for K67-68 products were made at around USD 1100-1140/mt FD and lower offers were also heard. Imported price moved all the way down by USD 30/mt. PVC products in Italy were offered at around EUR 880-960/mt FD and transactions were made leaning to low ends. Price in Mediterranean area was heard stable around USD 1080-1100/mt ex-warehouse. Major Taiwanese producer offers for February shipment cargoes were announced at USD 1020-1040/mt CFR; with an obvious increase of USD 50/mt compared to last month’s done deal and the transactions were made around USD 1020-1040/mt CFR. New offers for Mar shipment cargoes were at USD 1080-1090/mt CFR. S.Korean producers offered their products at the same level with FPC, around USD 1070-1080/mt CFR, and transactions will be made around USD 1070/mt CFR. Japanese producers announced new offers for Mar shipment cargoes at around USD 1080/mt CFR. Imported US products were seldom heard and new offers for Mar. cargoes were pulled up to around USD 1080/mt CFR, USD 80/mt higher than its former offers, and transaction was made around USD 1060/mt CFR. Major Thai and Indonesian producers offered their K67-68 PVC to China higher to USD 1100/mt CFR. New transaction for Mar. shipment cargoes is supposed to be made at USD 1080/mt CFR.

CHINESE PVC IMPORTS*

From 13-Jan 12-Dec Jan-Dec 12

Tons Tons Tons

Germany 630.3 495 7375

Hong Kong 45.463 25 449

Indonesia 1913 1682 20701

Japan 15067.788 11042 165107

Malaysia 73.96 51 3892

S. Korea 5214.716 3943 43666

Taiwan 26521.548 26769 313895

Thailand 876.9 2049 24493

United States 32721.192 15176 345783

Others 979 789 15055

Total 84044 62217 940416


IMPORT NOMINATION OF POLYVINYL CHLORIDE

Date Source Harbor Nomination (USD/tonne)

Conclusion Price (USD/tonne) Seller ETD

Feb Four weeks

ago Change

20 Feb Taiwan CMP 1090 1070 1020 +50 FPC Mar

20 Feb Korea CMP 1090 1080 1030 +50 LG/ Hanwha Mar

20 Feb Japan CMP 1090 1080 1050-1070 +40 Taiyo Mar

20 Feb USA CMP 1080 1060 1010 +70 Georgia Gulf Mar

CMP: China Main Port

CHINA PVC* IMPORTS IN JAN 2013

Trade mode Volume Sum Average prices

Tons USD USD/MT

General Trade 1828 2638346 1444

Assembling Trade 4065 4296661 1057

Processing Trade 77368 73199574 946

Bonded Warehouse 548 550836 1005

Bonded Area Resale 236 221835 942

Others - - -

Total 84044

Note: * marked information is pure PVC

All data sourced from CIQ

Note: Average prices of Import PVC is calculated with volume and sum

Export market

Domestic PVC market was kept in serious demand supply confliction, especially for acetylene based PVC. Enormous social stock has caused slight price drops in East and South China and traders were facing pressure from both ends (producers and buyers). Ethylene based PVC price was kept stable, as imported VCM price hiked nearly USD 80/mt during the past month. Price-wise, SG-5 products in E. China were mainly offered stable to firmer at around CNY 6400-6420/mt ex-warehouse and the transaction prices were lowered by around CNY 30/mt, while in S. China the offers were stable between CNY 6450-6480/mt ex-warehouse, and lower prices were heard at around CNY 6390-6450/mt ex-warehouse. The transaction was still not satisfying. Ethylene-based PVC was heard stable to higher as the feedstock support was stronger. Prevailing prices were around CNY 7000-7250/mt in major consumption areas. According to analysis, stock issue is the main reason for price drops. Downstream players were not completely back to the market and short of labour could still be a big problem, too.


Producers were running with higher operation rates and new established plants will be running higher.

Acetylene-based/Ethylene-based PVC export

SG-5 PVC products from China were offered higher to around USD 960-1020/mt FOB as buyers were showing less interest to carbide based products. Producers said the export trade was hard since feedstock cost for calcium carbide was still high and PVC products from NEA producers were cutting their offer prices. Traders in Shanghai area offered export PVC at around USD 950-970/mt FOB. Producers in Tianjin Port restarted their export offer at USD 940/mt FOB. EDC prices were fluctuating within small ranges and VCM price hiked a lot, ethylene-based PVC was under higher feedstock cost pressure. Domestic products were offered back to around USD 930/mt FOB as imported VCM price was lowered. Offers from Alashankou were heard around USD 940/mt DAF. Transactions were heard around USD 890-915/mt DAF, firm as former.

Chinese Export Amount & Prices

CHINA PVC* EXPORTS to MAJOR AREAS

To

13-Jan Average price 12-Dec Average price

Tons USD/MT Tons USD/MT

Brazil 64 1985.9 96 1990.8

Djibouti 26 860.8 116 999.1

India 13064 951.1 2253 1004.9 Indonesia 89.5 996.7 51 942.2

Kazakhstan 1902 897.2 2030 899.0

Kenya 528 927.6 297 908.6

Korea 39 939.0 34 957.0

Kyrgyzstan 190 946.2 230 931.2

Russia 6483 908.8 4958 904.6

Angola 122 929.4 - -

S.Korea 2807 943.7 4212 924.1

Tajikistan 116 987.5 438 926.5

Thailand 3300 915.9 3036 907.9

Uzbekistan 2960 901.8 2680 896.4

Total 31689 22999

Note:*marked information is pure PVC


CHINA PVC* EXPORTS IN JAN, 2013

Trade mode Volume Sum Average prices

Tons USD USD/MT

Bonded Area Resale - - - Frontier Small Trade 50.216 78813 1569.5 Processing Trade 16375.1 15158862 925.7

General Trade 29405.007 27404480 932.0

Total 45830

Note: * marked information is pure PVC

All data sourced from CIQ

Volume and Average Price of China Exported PVC

Note: Average prices of Export PVC is calculated with volume and sum


Production news

CHINESE PVC PLANTS OPERATION (UNIT: KMT/YR)

Region Producer PVC Plant Update (unit: kt/yr)

East China

Anhui Huasu Chemical 460,000t/a plant about to put into use before April.

Zhejiang Jvhua 150,000t/a plant under shutdown

UPC Chemical 300,000t/a PVC running at 80%

Xuzhou Tiancheng Still under shutdown

Northwest China

Gansu Xinchuan PVC plant shutdown since end May, 2012

Qinghai Saltlake New PVC plants still not put in use

Inner Mongolia Dongxing VCM facility on trial

Baotou Haipingmian 400000t/a plant still under shutdown

North China Hebei Shenghua New plants running with full capacity

Shandong Dongyue Shutdown from Nov,2012 to 4th Jan,2013. Operating 50%

SW/S China Sichuan Jinlu Running with operation rate of 60%

Tosoh (Guangzhou) Running with operation rate of 90%

Forecast

Trend PVC price will be stable and the purchase interest will be low in Mar, as some players will still not be back to the market.

Supply Supply is sufficient since there are stocks in futures storages. Although some PVC producers are on maintenance, the supply will still be more than enough.

Demand Demand in North part of China will slowly pick up, while in South and East China, downstream producers will still run with low operation rates.

Production output PVC plants were running in high operation rates, while some plants may short of carbide supply.


NOTE: In the price charts, trends of prices are suggested by colors; red-up, blue-steady, green-drop. Information contained in this reports is obtained from sources believed to be reliable, however no a responsibility nor a liability will be accepted by CCAON commercial decision claimed to have been based on the content of the report. Reproduction of any part of this work by any process whatever without written permission of CCAON is strictly forbidden.

Subscription: Mr. Michael Ma: [email protected]

Tel: 0086-10-64335599-634 Fax: 0086-10-64380147

Address: B-701，Fairmont Tower, No.33 North Guangshun Street, Chaoyang

District, Beijing

Post Code: 100102

Glossary

E.China Jiangsu, Jiangxi, Zhejiang, Anhui, Shanghai

N.China Beijing, Tianjin, Hebei, Inner Mongolia, Shanxi, Shangdong

S.China Guangdong, Guangxi, Fujian

NE.China Heilongjian Jilin, Liaoning

SW.China Sichuan,Chongqing, Yunnan,Guizhou

C.China Henan, Hubei, Hunan

NW.China Shaanxi, Qinghai, Gansu, Sinkiang, Ningxia
mailto:[email protected]

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