INDUSTRY INSIGHTS

An inside look at polymer trading: Interview with Max Yong

Trading in polymers involves sourcing and distribution of polymers. Trading companies work with suppliers and customers and rely on their distribution network to ensure timely delivery. Essentially, traders bridge the gap between producers and end-users and serve as an important link in the polymer supply chain. The success of a trading company depends on its ability to sell polymers at a competitive price, with the right quality and at the requested time. It necessitates in-depth understanding of the market in addition to product knowledge and the ability to provide accurate information and respond promptly to market needs.

Hanwa Co., Ltd is a Tokyo public listed company established in 1947. It has 6 main business divisions, with a sales turnover of more than USD 16 billion as of FY2014. It has more than 50 offices worldwide and more than 2,700 employees. Hanwa supplies a broad spectrum of products, including steel, non-ferrous metals, food, fuel, chemicals, lumber, machinery and many other items, to an equally diverse range of customers. The company is a trader in petroleum and chemical products and paper materials, and has several subsidiaries and sales bases in the U.S. and around Asia.

Max Yong

Deputy General Manager – Chemical Department

Hanwa Singapore

Max Yong works in Hanwha Singapore Pte Ltd as Deputy General Manager of Chemicals Department. He handles the company’s polymer business in Asia-Pacific, and is involved with Sourcing, Sales, and Market & Product Development. He is also involved with developing finished products business. With 25 years of experience, he has played different roles in the Polymer Supply Chain. He has experience of working as Polymer producer, trader, converter, as well as consultant. His assignments so far have expanded his contacts on a global basis. His Chemical education background and ability to speak many local dialects give him a value-added function to excel in the Polymer Industry.

In an interview with Lekhraj Ghai of POLYMERUPDATE, Max Yong, Deputy General Manager - Chemical Department at Hanwa Singapore, summarizes the underlying patterns of polymer demand, explores logistical challenges and provides a fresh look at the polymer supply chain.

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INDUSTRY INSIGHTS

Interview of Max Yong (MY) with Lekhraj Ghai (LG):

LG: Tell us a bit about your new role at Hanwa Co., Ltd. What is the line of business at Hanwa Singapore?

MY: I handle polymers (mainly, PE and PP) for the Asia-Pacific market. This includes sourcing, sales, market development and strategic planning. Hanwa Co., Ltd imports PE and PP related finished products (e.g., bags) from China and South East Asia into Japan. I am involved in allocating polymers to Hanwa’s OEM converters and also identifying investment opportunities.

LG: Which are the polymeric materials that Hanwa currently deals in? Where does it procure the materials?

MY: Hanwa mainly handles PE and PP. We mainly procure from suppliers in the Middle East and South East Asia.

LG: Which are the key factors that impact prices of polymers?

MY: Factors that impact the prices of polymers include the supply-demand of feedstock, polymers and related finished products. Plant troubles, turnaround maintenance and price fluctuations in the plastic Futures market are also important factors.

LG: What has been the impact of the fall in prices on the sales and marketing of polymers?

MY: A fall in polymer prices impacts the supply chain. For polymer producers, traders/distributors, it can mean reduced or negative margins. For converters, it can mean higher margins or reduced margins depending on their business strategies.

LG: Which are the key global expansion projects that are expected to make an impact on the polymers market?

MY: For now, till the end of next year, the new MTO/CTO/PDH projects in China, the new petrochemical projects in the Middle East and selective Asia markets should give the market more options of polymer supply. The lifting of sanctions in Iran may also put polymer prices under pressure.

LG: How does Hanwa incorporate research and development to meet the varied and complex needs of customers?

MY: All the concerned staff undergo product training to understand the needs of customers and suppliers. Regular meetings and video conferences are held to discuss market (including products and customers) and pricing developments. Research and findings are documented and the staff is encouraged to make queries and provide inputs.

LG: Since when has Hanwa been active in India? Where in India does Hanwa have offices? How many employees are there in India? Does Hanwa presently supply polymers from India to other global markets?

MY: Hanwa has offices in Mumbai, New Delhi and Chennai, and has more than 15 employees in India. Hanwa has limited import activities, and is in the process to expand export activities.

LG: What is the quantity of PE and PP that Hanwa currently sells in India? How does it compare with major suppliers from the Middle East?

MY: We have very limited importing activities, and cannot compare with suppliers from the Middle East.

LG: What are your thoughts on the Indian plastics industry? Is Hanwa looking at investment opportunities in India?

MY: Growth in demand for PE and PP in India is relatively similar to the growth in its GDP. With low per capita consumption, the potential for growth is huge. Export of polymers may happen in a short 2–3 year period. Unless there are continuous polymer expansion plans, the surplus may turn into deficit after 3 years, especially for PE. Hanwa is identifying business opportunities in India, and investment is one critical part.

LG: What are the challenges encountered in the overseas sales and marketing of polymer resins?

MY: Prices have become more volatile as the supply chain challenges itself to keep lower inventory. Free Trade Agreements (FTAs) and Anti-Dumping

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INDUSTRY INSIGHTS

measures for polymers and related finished products affect trade flows, pricing and also margins. Plastic Futures price movement also does affect buying sentiments—at some point, excessively.

LG: Could you give us an idea about the demand-supply balance for PE and PP in the Asian markets?

MY: The Asia market can be broadly divided into North East Asia, South East Asia, Oceania and South Asia. Other than South East Asia, the rest of North East Asia (led by China), Oceania and South Asia are importing regional markets. Feedstock availability affects the supply demand of polymers. Particularly in Asia, there are more options of propylene supply (from refinery, naphtha, liquefied petroleum gas, propane dehydrogenation process and residual fluid catalytic cracking) than ethylene (from naphtha, ethane). This has been reflected in lower propylene prices compared to ethylene prices.

LG: What is your take on the slowdown in China’s economy? How is the slowdown expected to affect the Asian polymer markets? What can be said about the CTO/MTO capacity additions in China?

MY: China is the biggest consumer market for polymers in Asia. The slowdown since early this year has caused PE and PP prices to drop by as much as 40 percent. CTO/MTO capacities have brought about more local supply, especially of PP. There has been

selective export of PP from China this year, and this is likely to continue for the coming 1–2 year period.

LG: Do you also trade in other polymers such as PVC, PS and specialty polymers?

MY: We do trade in PS and other specialty polymers like polyolefin elastomers, high retort compounds, cyclic olefins compounds, protective film polymers and easy peel olefinic compounds.

LG: What advice would you give to new entrants on sales and marketing strategies?

MY: Study and know the company, its products, leadership and employees. Failing to ask and share could become a progress barrier. Work hard and stay positive. Try and take a “Balanced” approach while setting strategies.

LG: How important are plastics market intelligence companies like Platts and POLYMERUPDATE when it comes to risk management and making trading decisions?

MY: Market data and market information are useful for concerned industry players and help in minimizing risk and make trading decisions. Price Reporting Agencies that have benchmark status for pricing tend to get more feedback from the industry, and thus provide more constructive market views and data.

END For further information, commentary and interviews, please contact Lekhraj Ghai at POLYMERUPDATE on +919967828215 or e-mail lekhraj@polymerupdate.com.

POLYMERUPDATE is an online destination for the plastics and petrochemical industry, which specializes in providing market-moving information and pricing data on petrochemical products and industrial

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October 5, 2015 POLYMERUPDATE You may not modify, copy or distribute any information contained in this document without our prior permission