plastic raw materials-present and future trends publication on mpma website.pdf · petchems on a...
TRANSCRIPT
![Page 1: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/1.jpg)
MPMA Seminar
14 March 2013, Johor
Plastic Raw Materials-Present
and Future Trends
Prema Viswanathan
Head of Middle East, South Asia Markets
![Page 2: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/2.jpg)
www.icis.com
Corporate Structure
![Page 3: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/3.jpg)
www.icis.com
ICIS Global Presence
![Page 4: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/4.jpg)
www.icis.com
What information does ICIS produce?
Chemicals Energy Fertilizers
“Trusted market intelligence for the global petrochemical, fertilizer and energy industries”
![Page 5: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/5.jpg)
www.icis.com
Petchems on a roller-coaster ride
• Petchem prices up on high crude, snug supply
• China polymer demand growth not up to expectations
• Margins squeezed down the chain
• Middle East players still lead on cash costs
• But new US supply could be a game changer
• India - the new demand driver, after China?
• China - the polymer price setter
• Southeast Asian polymer market trends
• Feedstock market trends
![Page 6: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/6.jpg)
www.icis.com
Demand growth slows in China
• China’s GDP growth has declined from the
double-digit pace seen in past decade
• Post-2008 stimulus package no longer
available to sustain polymer demand growth
• Slowdown of EU, US economies has caused
sharp fall in Chinese finished goods exports
• Chinese domestic market not expanding fast
enough to make up for export decline
• Polymer demand growth in China in 2010-
2012 below 5%/year
• PE imports from Iran into China continues
despite sanctions
![Page 7: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/7.jpg)
www.icis.com
Middle East a key exporter, but faces hurdles
•Middle East moving up the cost curve
•Mideast PE capacity to hit 28m tonnes by
2015
•Propylene/PP economics not as good as
ethylene/PE, so less expansions for PP
•Gas shortage in GCC, only Iran. Qatar have
surplus supply
•Sanctions impact Iran investments, trade
flows
•Labour shortages, logistics woes, supply
constraints
• Shifting govt priorities in GCC
![Page 8: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/8.jpg)
www.icis.com
US ethylene capacity to expand by 38% by 2019
*Assumption of world-scale cracker at 1.25m tonnes/year Source: ICIS
• Exports of
PE, PVC from
US expected
to surge in
2016-17
![Page 9: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/9.jpg)
www.icis.com
India - the new demand driver, after China?
• Polyolefins demand grew steadily in
2012, overriding a sluggish
economy.
• April to Nov 2012 Market
Estimate: PP demand increased by
16%, LLDPE by 15%, HDPE by 11%
and LDPE by 21%.
![Page 10: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/10.jpg)
www.icis.com
India PE, PP demand (2013)
• Consumption in India is likely to see
steady growth in Q1 2013 on
domestic demand
• However, in early Feb 2013, India
projected weaker GDP growth in the
current fiscal
• Logistics challenges caused by weak
infrastructure
• Significance: Sluggish growth may
dampen polyolefins buying sentiment
Source: Plasopedia
![Page 11: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/11.jpg)
www.icis.com
China – a key price driver
• Regional prices tend to gain support when China is
buying.
• China produced 57.81m tonnes of plastics finished goods in January-December 2012, up 9% year-on-year, a much lower growth rate compared with 2011.
• China’s manufacturing activity still in expansion mode, but lower export index for February indicates unstable external demand.
Source: ICIS
![Page 12: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/12.jpg)
www.icis.com
China PE, PP stable to higher in March
Bullish factors:
• High feedstock prices in Asia
• Low end-user inventory
• Relatively tight export supply from Mideast
because of planned and unplanned plant
shutdowns in December and January
Bearish factors:
• High producer inventory post Lunar New Year
• Low operating rates at Chinese processors
as workers returned from holiday only after
24 February
![Page 13: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/13.jpg)
www.icis.com
SE Asia’s PE market to
experience mixed trends
• Regional LLDPE prices may be dampened on the start-up of new plants.
• New Middle East
supply started up in 2012 may affect HDPE and LDPE prices in SE Asia.
![Page 14: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/14.jpg)
www.icis.com
Tighter regional supply may
support SE Asia’s non-dutiable
PP prices
• Supply in Indonesia and Malaysia may be tight because of local production issues.
• ExxonMobil’s new
PP plant in Singapore may ease the tight regional supply.
![Page 15: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/15.jpg)
www.icis.com
• C2 exports from Iran to China infrequent
• Saudi spot exports tight because of derivative
demand
• Most Asian crackers running at 90-100% in Feb
• Japanese crackers still at low rates (80-90%)
• Near term outlook positive on tight supply
Asia C2 outlook for 2013 positive
![Page 16: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/16.jpg)
www.icis.com
• China to remain key driver
• China’s propylene supply to increase
• 8 new PDH/MTO units in China due to start
in 2013
• But imports to rise on demand from new
phenol-acetone and PO units
• Demand to grow in line with China’s GDP
growth
• Asian prices may hover at high levels on
China’s imports
Asia C3 supply, imports to rise
![Page 17: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/17.jpg)
www.icis.com
ICIS pricing methodology
![Page 18: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/18.jpg)
www.icis.com
ICIS pricing plays a special role
• Complex markets need trusted and independent price
discovery mechanisms to manage risk and ease business
negotiations.
• Competition laws prohibit market participants from direct
communication, producers cannot speak to each other on
pricing.
• ICIS pricing has grown to be a key information conduit for
global chemical markets. ICIS pricing has a privileged and trusted position as the
independent clearing house for business-critical market
pricing information
![Page 19: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/19.jpg)
www.icis.com
The process of price reporting
Buyers
Producers Traders
Information Exchange, phone, yahoo, email – daily or weekly Other Interested
Parties* Other Interested
Parties*
*Shipbrokers, storage companies, government organisations, etc
Trusted as the central repository of price information
![Page 20: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/20.jpg)
www.icis.com
Our commitment
• Provide unbiased and accurate
price assessments
• Information gathered from wide
cross section of contacts
• Rigorous cross-checking of
information.
• Build close contacts with the
industry.
Reflect The Market, Not Lead It
![Page 21: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/21.jpg)
www.icis.com
Critical skill – Staff market expertise
![Page 22: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/22.jpg)
www.icis.com
Types of Market Information
Confirmed Deals
Bids and Offers
Inventory Levels
Freight Rates
Plant Production Data
Derivatives/Feedstock
Historical Data
![Page 23: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/23.jpg)
www.icis.com
Check Parameters
Volume
Time Period
Product Specification
Geographic Basis
Spot or Contract
![Page 24: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/24.jpg)
www.icis.com
Price Reporting Challenges
Manipulation
Illiquid, opaque markets
Conflicting news
Confidentiality
![Page 25: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/25.jpg)
www.icis.com
Cartels and price fixing
• Anti-trust legislation prevents producers from discussing prices
• Price Reporting Agencies provide a route for producers to convey
their views to the market
• ICIS’s procedures are subject to rigorous internal and external
RBI compliance
• ICIS conferences avoid presentations in which producers forecast
prices
![Page 26: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/26.jpg)
www.icis.com
Methodology for Asia polyolefins
• Fridays at 1730 hours in Singapore.
• Cargoes typically loading or delivered 2-4 weeks forward from the date of
publication.
• Assessments for China, Hong Kong, Taiwan, southeast Asia and India are
based on a LC at sight basis only, although deals with differing credit terms
will be taken into consideration.
• Bulk parcels are in the range of 100-1,000 tonnes.
![Page 27: Plastic Raw Materials-Present and Future Trends publication on MPMA website.pdf · Petchems on a roller-coaster ride • Petchem prices up on high crude, snug supply • China polymer](https://reader034.vdocument.in/reader034/viewer/2022042420/5f3761edb5ce9530ec788498/html5/thumbnails/27.jpg)
Contributions
Chow Bee Lin (Asia polyolefins)
Tel. +65 6780 4398
Muhamad Fadhil (Middle East and South Asia polyolefins)
Tel: +65 6780 4334
Peh Soo Hwee (Asia olefins)
Tel. +65 6780 4347
Joseph Chang (ICIS Chemical Business)
Malini Hariharan (ICIS training)