Report Summary. INR (unchanged) per Kg, Injection grade

Transcription

1 Bi-Weekly Polypropylene Price Outlook and Stregy Decision enabling cash market analysis & price outlook For the Fortnight beginning 27 th Dec PP India Dec Fundamental Summary Technical Summary Price Outlook Summary Stregy Review Generic Procurement Stregy Report Summary INR (unchanged) per Kg, Injection grade Price drivers Impact Weightage % Supply/ demand balance Feedstock price movement Asian demand Declining Landed Cost Appreciion of Indian currency Bullish Bullish Bullish Bearish Bearish Summary Momentum is mixed, while staying above 18 EMA. Fall through INR likely to put the price in prolong bearish ph Mixed to Positive Summary: Concisely, PP Injection India price is likely to trade mixed around INR in the forthcoming few more weeks. Dec 2013 buying requirements completed INR per Kg. 50% of Jan 2014 buying requirements completed INR per Kg. Consider remaining 50% of Jan 2014 and 50% of Feb 2014 buying requirements INR per Kg. 1 Discuss with our expert Phone: E mail: services@transgraph.com Internet:

2 Market recap Polypropylene prices remained steady during the last fortnight with rising feedstock prices amid strength in energy markets and expection of rising demand in the coming weeks. Feedstock Market analysis Crude oil and Naphtha: Crude oil prices continued its upside trend during the last fortnight driven by expection of increasing demand on improving economic condition of major nions. Most of the key economic releases from the US indiced modere economic growth in manufacturing and industrial sector, while the economic growth re in the third quarter climbed up by 4.1 percent highest since Q Besides, fall in crude oil stocks and rise in petroleum demand in the US, supported prices to take positive cues. Unresolved geopolitical tension in Libya creed concern of shortage of world oil supply in near term, which also fueled Brent oil prices to march high above USD 112/Bbl. In January, Gulf coast pipeline in shall carry 700,000 barrels of crude from Cushing to Gulf refineries. This may reduce glut of Cushing stocks. However, with the rise of domestic production which is above 8Mbpd and delay in full fledge start up of pipelines stock level shall increase in near term pressurizing oil price. Total OECD commercial oil stocks declined by 2.5 mb in October to 2693 Mb, indicing a deficit of around 10.1 mb compared to the five year average. Crude inventories reached 26.4 mb above the seasonal norm, while products fell to 36.5 mb below the five year average. However, commercial stocks in terms of days of forward cover, stood 58.5 days, 0.7 days more than the five year average. Moving forward, product stocks are expected to decline while increase in stocks level shall lead to higher stocks of crude oil due to rising supply majorly in North American region. The closure of most of Libya's oil facilities due to civil clashes since July has underpinned the supply from 1.18Mbd to 0.3Mbpd, the worst disruption to hit Libya's oil industry since the 2011 civil war. In the month of October, Libya pumped 0.45 million barrels of oil a day, well below its 1.4 million barrel capacity. In near term, there are no clues on reopening of the major oil ports which are under control of militants. This may increase bullish bet on oil prices. Naphtha prices continued its upside trend during the last fortnight to reach USD 995/ton, highest since April Naphtha prices have got the boost from delay in inflow of supply flow. 150, ,000 tonnes naphtha deliveries from the US to Asia will be delay as wintry condition shall cause shipments to stuck in the US gulf coast. Therefore, vessels which are supposed to arrive in Asia in the second half of December are expected to arrivals in January. In January, Asia is expected to receive total 2m tonnes of naphtha supply including volumes spilled over from December. These are heavier grade naphtha from Northwest Europe, Mediterranean, US and Russia. 2

3 Increases in demand of Ethylene have lead to rise in import by Japan which has increased by 18% to 1.38m tons in November. In China, ahead of Lunar New Year in January firm downstream market is expected to hold prices high in near term. At India front, naphtha export from India is expected to remain stable as total exports are estiming to remain around 700,000 tons which is near to December volume 725,000 tons. However, in medium term, demand of naphtha is likely to slide from its current level following the end of the Lunar New Year and the active cracker maintenance from beginning of the second quarter which would cast downward pressure on prices. Overall, Naphtha prices in Asia market look set to rise amid shortage of supply because of delay in cargo availability while start up of crackers in internional market may increase demand gradually and soak up supply coming into the market. Concisely: Improving economic situion of major oil consuming nions shall hold demand higher side, supporting oil prices to trade high in near term. Fundamental market analysis Propylene Propylene prices during the fortnight climbed up to last one and half month s high tracking gains in upstream crude oil and naphtha prices. Increase in price differential between Europe and Asia propylene prices during last one month from USD 2 to USD 88, indices th lower propylene prices in Asian region comparive to Europe shall divert some cargoes from Asia to European region. This may lend some support to Asian Naphtha prices in near term. First quarter supply constraints and pre buying of poly propylene are likely to keep the propylene prices higher in near term. Moving ahead, onset of winters in Europe and US shall call for higher usage of Gas and Propane as heing fuel limiting its availability to crackers. This shall keep prices of naphtha on firm tone which will further get reflected in propylene prices in the near to medium term. Technical outlook Price is trading above 18 pd EMA indicing positive sentiments. On the upside USD 1430 would provide interim resistance. However, on the downside price is likely to get support around USD Summary: Concisely, price is likely to trade mixed around USD 1385 with some positive bias in the forthcoming few weeks. India PP Market PP market scenario Asian PP Market Gains in raw merial prices and optimistic Supply tightness in feedstock prices 3

4 demand sentiments kept Polypropylene prices in Indian market steady during the fortnight Surge in India economy to 4.8 percent, contributed by rise in construction and agriculture activities indices rise in consumption. Meanwhile differential between domestic market prices and landed cost of PP continued to remain in negive zone, currently hovering INR Weakening differential shall prompt domestic producers to keep prices steady in the near to medium term. continued to support PP prices during the last fortnight. Ahead of Lunar New Year season in China, stocking activity by traders shall cree supply shortage which will support prices in near term. Major indices of China manufacturing are indicing for expansion of industrial activities signaling for rise in consumption for industrial uses. Besides, delay in start up of Shaoxing Sanyuan Petrochemical having capacity of annual production 300 Ktpa, shall cree supply shortage and may lend support to prices. Price after finding support around INR is seen trading mixed around INR for the past few weeks. However sustaining below INR likely to shift sentiments to negive. On the higher side, resistance is expected in the range of INR Summary: Concisely, PP Injection India price is likely to trade mixed around INR in the forthcoming few more weeks. Summary: Concisely, PP Injection South Korea price is likely to trade mixed in the range of USD in the forthcoming few weeks. 4

5 Generic procurement stregy One month advance Procurement month Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Product (PP Injection Grade) India South Korea Saudi Arabia Germany (Europe) INR INR INR % completed INR Consider remaining 50% INR Consider 50% INR USD USD USD 1505 Consider USD 1505 Wait USD USD USD 1490 Consider USD 1490 Wait EUR 1385 EUR 1375 EUR 1375 EUR 1375 Consider 50% EUR 1375 For customized procurement stregies, contact us Facts and Figures digest Feedstock prices Market 24 Dec Dec 13 Crude oil, Brent, USD/bbl Crude oil, WTI, USD/bbl Naphtha, C+F, Far East, USD/T Propylene, CFR India, USD/T Propylene, FOB Korea, USD/T Product prices (Injection Grade) Market 24 Dec Dec 13 PP India, INR/Kg PP South Korea ^ PP Saudi Arabia ^ PP Germany, Euro/T ^ Prices in USD per ton, CIF India 5

6 Grade Differentials (Basis Injection grade) PP grade differentials India South Korea Grade Nov 13 Oct 13 Change Nov 13 Oct 13 Change BOPP Block Copolymer Raffia Random Copolymer TQ Film Homopolymer Indian prices in INR per kg, Basic re, South Korea prices in USD per ton, CNF India Market Price Upde Spreads and margins differentials Market 24 Dec Dec 13 Change % change Naphtha Crude oil differential, USD/T Propylene Margin (Propylene Naphtha spread), USD/T Weekly Dashboard Naphtha Crude diff (USD/ton) Propylene margins (USD/ton) Daily PP margins (%) Monthly PP margins (%) Regional feedstock cost differential (USD per ton) Landed Cost Differential (India South Korea, Landed Cost), INR/kg 6

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