1. Asia Polyolefins Market Outlook, Impact of Crude Oil Prices
MPMA Roadshow 2017 – Head Office
21 February 2017
Felita Widjaja, Leanne Tan

2. Agenda About ICIS Impact of Crude Oil on Polyolefins
Asia PE & PP Review (Q Q1 2017)
Asia PE & PP Outlook (2017)
Summary

3. About ICIS

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6. Impact of Crude Oil Prices on Polyolefins

7. Crude Price Movements

8. Crude Prices vs Polyolefins Prices
PE and PP prices do not track crude prices closely
Crude oil price fluctuations in Q3/Q4 barely impact PE and PP prices
Crude oil prices largely affect market sentiment
Affects buying/selling patterns
Indirect effect on supply-demand balance
PE/PP demand-supply balance stronger price driver
Source: ICIS

9. Asia Polyethylene Market Review
Slides not ready yet.

10. China PE Review – Q Q1 2017
Ethylene prices more volatile than PE; closed the gap and surpassed LLDPE and LDPE prices
LLDPE and LDPE prices shot up after the Golden Week holiday in October amid restocking activities and tighter supply
PE prices fell in Nov to mid-Dec amid availability of competitively priced cargoes from US and India and sharp falls in LLDPE futures market
PE prices stabilizes and relatively stable-to- firm in the first 1.5 months of 2017 amid comfortable-to-tight import supply

11. SE Asia PE Review – Q – Q1 2017
Relatively weak demand in SE Asia capped prices in Q4 2016
Ethylene price drop had little impact on PE prices
LLDPE prices largely stable throughout; fluctuated within $50
LDPE prices were surpassed by China prices but caught up in January
Volatile SE Asia currencies exerted pressure on prices
Source: ICIS

12. India PE Review – 2016–Q1 2017
HDPE, LLDPE prices depressed by ample domestic availability
Price discounts for volume, cash bookings
LDPE film prices supported by limited domestic supply
Indian imports heavily influenced by import parity of domestic product
Demand hit by demonetisation move in November
Market gears up for new domestic supply
Exports emerge in Q4 2016
Source: ICIS

13. Asia Polypropylene Market Review

14. China PP Flat Yarn Review – Q4 2016-Q1 2017
Prices in China overtake prices in SE Asia twice in Q4 2016
Redirection of spot allocations from SE Asia to China due to better netback
Physical spot prices in China impacted by speculative buying and selling in futures market
Prices stagnate in early 2017 despite tight supply of import cargoes due to build up of domestic inventory levels
Source: ICIS

15. SE Asia PP Flat Yarn Review – Q4 2016-Q1 2017
Prices in Q supported by supply tightness
Less allocation of spot cargoes to SE Asia due to attractive arbitrage opportunities in China
Import trade in SE Asia hampered by devaluation of regional currencies
Bullish market in Q amid supply shortage owing to turnarounds in the MidEast and SE Asia; firm feedstocks
Narrowing spread between PP and propylene prices in early 2017
Source: ICIS

16. India PP Flat Yarn Review – 2016-Q1 2017
PP prices see limited upward movement in Nov/Dec
Currency crunch
Lower import parity
Construction sector hit
Little impact of Reliance Jamnagar turnaround
Domestic prices did not catch up with China Q4 uptrend
January prices rebound on limited inventories, improved demand
PP spot prices ($/tonne) – India versus China, SE Asia
Source: ICIS

17. Asia PE, PP Market Outlook

18. PE Outlook – supply
Import prices likely pressured by increased global supply
Approx. 4.5 million tonnes additional capacity from US shale gas projects
Potentially 2.58 million tonnes from China
Around 2 million tonnes of PE expansion plans in India
China continues to be the main Asia market
Source: ICIS

19. PP Outlook – supply
Little fresh material expected from the US and Europe
Potentially 3.39 million tonnes additional capacity from China
Around 2 million tonnes of which are CTO expansions
Small volumes of added capacity in India and SE Asia
Source: ICIS

20. Economic Growth Projections
PE, PP Outlook – 2017 demand
Relatively weak demand expected to exert pressure on Asian prices
China expected to continue to have ample supply in 2017
Expansions in China to diminish reliance on imports in the long run
Improved demand in India in Q1 2017
Net importers such as Indonesia and Vietnam continue to drive import demand in SE Asia
Economic Growth Projections
(annual % change)
Country
2016
2017 (estimate)
China
6.7
6.5
Indonesia
5.1
5.3
Vietnam
6.6
Developing East Asia
5.8
5.7
World
2.4
2.8
Source: World Bank
Source: ICIS

21. Summary

22. Summary Prices Supply Demand Growing global capacities
Crude prices continue to play a role in setting market sentiment
Import PE/PP prices in China to drive price direction in SE Asia and India
Prices may come under pressure due to production expansions
Supply
Growing global capacities
Mainly from shale gas projects for PE
PP expansions dominated by Chinese CTO projects
Demand
Moderate growth in China, less reliance on imports
Relatively weak regional demand year on year in SE Asia
Improved Q demand in India; LLDPE, HDPE imports to moderate

23. Thank You Asia Pacific – PE Asia Pacific – PP
Felita Widjaja
Angie Li
Asia Pacific – PP
Leanne Tan
Dora Xue
Middle East/South Asia PE & PP Veena Pathare