1. Oil Prices and China & SE Asia PE & PP Market Trends and Outlook (Q3/2016)
MPMA Roadshow 2016 – Ipoh & Penang 20th and 21st April 2016
Chow Bee Lin
Head of Asian Markets, ICIS

2. Agenda About ICIS Crude Oil Market Trends and Updates
Asia PE & PP Price Trends 2015-April 2016
Asia PE & PP Market Outlook Q3/2016
Conclusion

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8. Crude Oil Market Trends and Updates

9. Crude Oil Price Trends 2015 to Q1/2016
Prices peaked amid declines in production, China stimulus, upbeat economic data & tension
Prices rallied above $50/bbl on lower US output and ME tensions
General Price improvement:
Agreement to freeze production at Jan level
Weaker USD
Decline in US crude production
Reached $40/bbl
General Price downtrend:
Strong USD
Oversupply worries
Declining demand amid weak China economy
Prices at 6 years low
OPEC decided to maintain production level
Iran sanctions lifted, lowest price since 2003

10. Asia PE price trends in 2015-Q1/2016

11. China PE Price Trends in 2015 to early April 2016
PE prices drop:
- Low domestic price
- Volatile stock & LLDPE future markets
- RMB devaluation
PE prices under pressure:
- China’s stock market turmoil
- RMB depreciation
- Slow demand 1 3 2
PE prices rebound:
- Low inventory
- Plant shut downs
PE price uptrend:
- Rising LLDPE futures
- No low-priced cargoes
- Tighter supply
Ethylene price
bottomed out

12. SE Asia PE Price Trends in 2015 to early April 2016
PE prices dropped:
- Weak sentiment
- Supply tightness ease
- Falling crude oil and ethylene prices
PE price uptrend:
- Tight regional and
import cargoes supply
- Improved market sentiment
PE prices improved on tighter supply expectations
PE prices rebound amid tight supply
Plant shut downs
Lower production
Redirected cargoes
PE prices fell on weak crude prices, China markets

13. Asia PP price trends in 2015-early April 2016

14. China, SE Asia PP import markets
Further depreciation by China central bank
China, SE Asia PP import markets
Crude < $45/br
11-12 Aug RMB lost 3.49%
Crude < $40/br
Crude recovery
PP fell on eased supply, weak demand in summer time
Persistent pressure on sellers
mid-Aug
mid-Dec
mid-Jan
Source: ICIS &

15. Key trends in Asia PP markets
PP prices hit six-year lows in December 2015
Slower demand growth in China amid economic slowdown and depreciation of the Chinese yuan
Restocking in Indonesia & Malaysian regained momentum in February as local currencies stabilised

16. Asia PE & PP Market Outlook Q3/2016

17. China PE/PP Market outlook Q3/2016
Domestic supply to increase as several plants resume operations after maintenance
Imports from Middle East & SE Asia to increase as plants in those regions restart after maintenance
Demand from home furnishing applications wane as new government policies curb sales of residential properties in first tier cities
China PP
New plants to start up in Q2 expected to ramp up production in Q3
Processors expected to cut output during summer in Q3
Volatile local PP futures & global crude oil prices to add uncertainty

18. SE Asia PE/PP Market Outlook
 Weak sentiment in China to spill over into SE Asia
June-August demand to weaken in Malaysia & Indonesia ahead of the Eid-ul Fitr holiday
Restocking to slow down in Thailand & Vietnam in monsoon months
Tight PP supply to ease from end Q2 when regional producers cleared their backlogs
Tight PE supply to ease from Q3 as regional plants restart after planned/unscheduled shutdown in previous quarter
PE e-exports offered from China into Vietnam at competitive prices

19. Conclusion Tight PE & PP supply in SE Asia expected to ease in Q3
Stable to soft demand from China
Cautious market sentiment, hand-to-mouth purchase
Market uncertainty persists

20. Thank you!