Catalogue of CCFEI China Report (Monthly) Paraxylene MEG Fiber Grade PET Polyester Staple. Caprolactam. Nylon Filament.

Transcription

1 Issue Number 152 May 2015 Catalogue of CCFEI China Report (Monthly) Polyester Paraxylene MEG Fiber Grade PET Polyester Staple PTA Bottle Grade PET Polyester Filament R-PET Fiber Nylon Caprolactam Nylon Filament Nylon Chips Acrylic Acrylonitrile Propylene/ABS Acrylic Fiber Viscose Viscose Feedstock Viscose Filament Viscose Staple Spandex MDI/PTMEG Spandex

2 China Report - Paraxylene - May Contract Price (Yuan/ton or $/ton) Month Change Price Pre. month RMB USD May settled Jun listed May settled Jun listed Idemitsu Kosan, JX Nippon Oil & Energy, S Oil, SK Chemicals and ExxonMobil released their June PX Asian contract nominations at $950/ton, $960/ton, $960/ton, $960/ton and $1,000/ton respectively. Asian PX contract price for May was finally settled at $925/ton. Sinopec settled its May PX contract price at 6,950 yuan/ton, up 100 yuan/ton from April level. Its contract nomination for June was placed at 7,000 yuan/ton, down 100 yuan/ton from May level. Spot Average Price ($/ton) Week Time USD based Week 1 4May 8May Week 2 11May 15May Week 3 18May 23May Week 4 25May 29May Monthly Ave. in May Central PX prices weakened notably in May. Week 1: PX market moved up before declining throughout this week. Affected by fluctuating crude oil values, PX prices changed accordingly. In midweek, bids for June cargoes once climbed up to $995 1,000/ton CFR CMP. In the second half of this week, offers for June cargoes retreated to $975/ton CFR CMP in line with falling crude oil price. Week 2: PX prices fluctuated in a small range this week. With the sales/production ratio softening, PTA values went down as well. And the total price drop amounted to $15/ton throughout this week. Week 3: On 15 May, the short selling power strengthened in PTA futures market after three major PTA warehouses were approved by Zhengzhou Commodity Exchange. Moreover, Ningbo Zhongjin started to feed PX unit on 19 May, and products were expected to be available 45 days later. As a result, PX values plunged by $41/ton on the same day. Later PX values rebounded by $10 15/ton based on a technical recovery following an excessive price drop. Week 4: Spot PX values were under weak fluctuation in line with a gradual reduction on the run rate of polyester industry. Asian PX contract prices for June were nominated in succession at $950 1,000/ton, but no result was gained through negotiation. In the afternoon of 30 May, a fire hit the refining unit of JX Nippon located in Kagoshima, bringing down two PX units with capacities at 180kt/yr and 450kt/yr, of which, the bigger one resumed operation soon. On 31 May, an earthquake with a magnitude of 8 happened in Japanese sea, but the influence was expected to be small as the hypocenter was far from the locations of PX units in Japan. Monthly International PX Value Trend Asia (CFR China, USD/ton) Europe (Euro/ton, FD) USA (cts/lb, DEL) Apr May Jun Apr May Jun Apr May Jun May PX contract price in Europe was settled at Euro 880/ton, up Euro 80/ton from April. May PX contract price in the United States was settled at cts/lb, up 3.5 cts/lb from April. It s predicted that the contract prices for June in these two regions will fluctuate in line with Asian price trend

3 Origin Statistics on PX Imports in China (kt, $/ton) Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. S. Korea , ,326 Taiwan ,347 Japan ,327 Indonesia ,358 Thailand ,335 Others , ,347 Total 1, , , , ,335 According to China Customs, in April 2015, China imported 1,040.1 kt of PX, down by 14.5 kt month on month, and the average price is at $835/ton, down by $21/ton on month. Domestic enterprises mainly import contract goods. South Korea, Japan and Chinese Taiwan are the three major sources for PX imports into China mainland in April, with volumes at kt (up 27.7 kt), kt (up 11.5 kt) and kt (up 3.3 kt), accounting for 41.55%, 22.57% and 10.84% respectively, and the combined import volume from the above three origins accounts for 77.97% of the total. Import volumes from Netherlands, Thailand, the US, Malaysia, Kuwait, Oman and Singapore remain at high levels. The combined import volume in January April 2015 amounts to 3,890 kt, up kt from 3,265.4 kt in the same period of The average import price is at $821/ton, down $514/ton from the same period of Plant Operation Monthly International PX Value Trend Fujia Dahua shut down two PX units with a combined capacity of 1,500kt/yr for maintenance in early May, and planned to restart them in early June. Ningbo Zhongjin fed 1,600kt/yr new PX unit on 19 May, and was expected to start commercial production 45 days later. South Korea s S Oil planned to restart 1,000kt/yr PX unit at the end of May following a maintenance shutdown from early March. South Korea s HCP planned to restart 1,200kt/yr unit in early June following a maintenance shutdown at the end of April. Other PX units still under maintenance include: Shanghai Petrochemical s 250kt/yr unit, Jilin Petrochemical s 120kt/yr unit, Mizushima Aromatics 350kt/yr unit and Jurong Aromatics 800kt/yr unit. China Mar Apr May Jun est. Run rates 75.8% 67.0% 60.7% Output (kt) According to CCFEI s statistics, China s PTA production in April is about 2,515 kt, which reflects a demand of 1,655 kt for PX. Based on operating rates of Chinese PX enterprises, PX production in April is assessed at around 704 kt. The total PX import volume in April is 1,040 kt, while total PX export volume is almost at 0. According to these data, the total supply in China in April is 1,744 kt, and there is a surplus of 89 kt in the supply. CCFEI Comment Feedstock: Now crude oil market firms up, and a peak time for oil consumption and a hurricane season will arrive in late July, which means there are certain speculative factors. However, crude oil values will mainly fluctuate in a wide range in June. On the other hand, the price spread between PX and naphtha has dwindled to $325/ton. So the run rate of PX units will be restrained somewhat in the future. PX supply: Some PX units in Asia will resume operation in June, so the overall supply volume is expected to grow somewhat. Downstream demand: Xianglu Petrochemical will keep PTA unit in outage in June, so the supply volume will not change too much in the whole month. However, as the run rate of polyester industry is declining notably, it s hard to ensure PTA production will not be cut in the future. As a whole, accumulated inventories will be seen soon. To sum up, PTA market sentiment might revise up slightly in a short term under the influence from Japan s earthquake, the shutdown of JX Nippon s unit and the rebound on crude oil value. In a medium to long term, PTA market will probably brace a downward trend again. Players need to pay close attention to the price trend of crude oil and the operation situation of PTA units

4 China Report - PTA - May RMB USD Contract Price (yuan/ton, $/ton) Month Change Range Prev. Month May settled ,350, 5,380, 5,400 5,200, 5,250 Jun listed ,300 5,300 5,400 May settled Jun listed April PTA contract settlement prices from domestic major producers still varied, with numbers from Sinopec, Xianglu and Hengli at 5,350 yuan/ton, 5,400 yuan/ton and 5,380 yuan/ton respectively. The contract nominations for June were issued as well, with the numbers from Sinopec and Hengli at 5,300 yuan/ton and 5,300 yuan/ton respectively. Weekly Average Spot Price (yuan/ton, $/ton) Week Time RMB based USD based Week 1 4May 8May 5, Week 2 11May 15May 5, Week 3 18May 23May 4, Week 4 25May 29May 4, Monthly Ave. in May 5, Central values in USD based PTA market totally dropped by $50/ton in May. After the three day May Day holiday, spot PTA market saw notably tight supply due to a cutback for two units of Yisheng caused by some problems. Meanwhile, the rumors about some PTA units led to a limit up on PTA futures on 5 May. Under the comprehensive influence, central values of PTA spots moved up continuously. In USD based PTA market, trading values of arrived or to arrive at port cargoes were pushed up to $ /ton buoyed by high buying ideas of some supplier. In mid May, polyester producers lowered buying ideas to slightly lower than $750/ton in line with weakening domestic market sentiment, and central market prices walked south day by day. On 15 May, the short selling power on PTA futures strengthened affected by the approval of three new major PTA delivery warehouses by Zhengzhou Commodity Exchange. Moreover, Ningbo Zhongjin started to feed PX unit on 19 May, and products will be available 45 days later. As a result, PX values plunged by $41/ton on the same day, and PTA futures TA1509 also witnessed a limit down on 20 May. Under this circumstance, spot PTA prices followed down to below 5,000 yuan/ton. USD based market saw thin buying interest, and polyester producers lowered counter offers to $ /ton, with discussions and trading values down to $ /ton. In late May, the sales/production ratio of polyester was kept at 50%, and the inventories of polyester enterprises were accumulating continuously. No matter BGPET chip producers and PFY producers, they all cut down run rates in different ranges or planned to do so. The comprehensive run rate of polyester industry in May fell by 4 percentage points from April. One parcel of bonded cargoes stored in previous years changed hands at $690/ton, and central values of arrived or to arrive at port cargoes also declined to about $710/ton by the end of May. RMB based PTA market was similar to USD based market in April, with central values rising by 15.8%. In early May, there were limited supplies from Zhejiang due to an unexpected short term shutdown by Yisheng and some problems on FCFC Ningbo s unit. Many parcels changed hands at 5,100 5,300 yuan/ton within one week. Then polyester market weakened, with sales/production ratio and prices both falling. Moreover, the news that Ningbo Zhongjin will have products available from its new PX unit in July enlarged the discount room for forward month PX cargoes. And rumors also said that Xianglu would restart PTA unit in June. Under the influence from above factors, PTA futures and spots both weakened. Domestic central spot PTA values fell to 5,100 5,120 yuan/ton, and trading values also softened to this level. In mid May, spot central values breached 5,000 yuan/ton mark, and many parcels changed hands at 4,900 5,000 yuan/ton. in late May, spot prices were corrected to about settlement prices, and offers mostly witnessed a spread of 140 yuan/ton to 150 yuan/ton from PTA futures TA1509, with many parcels booked at 4,850 4,880 yuan/ton. Monthly International PTA Value Trend Asia ($/ton, CFR) Europe ( /ton, FD) USA (cts/lb, DEL) Apr May Jun est. Apr May Jun est. Apr May Jun est May PTA contract prices in Europe were finally settled at /ton, up 53/ton on month. May PTA contract price in the United States was finally settled at cts/lb, up 2.55 cts/lb on month. It s predicted that the contract prices for June in these two regions will rebound somewhat in line with Asian price trend

5 Inventory Status and Operation of Chinese PTA Producers in China (kt, $/ton) Origin Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. S. Korea Taiwan Japan Thailand Others Total QTA/EPTA According to Customs statistics, China s import volume for terephthalic acid in April 2015 totals 42.6 kt, down by 37.3 kt from previous month. The average price for the imports declared to the Customs is at $610/ton, up by $28/ton from previous month. China s import volume for PTA (tariff number: ) in April totals 38.8 kt, down by 24.7 kt from last month. The average price for imported PTA is at $611/ton, up by $26/ton month on month. China s import volume for QTA/EPTA (tariff number: ) in April totals 3.8 kt, down by 12.6 kt from one month earlier. The average price for imported QTA/EPTA is at $612/ton, up by $38/ton month on month. By import volume into China, the first three countries and regions in April are South Korea, Thailand and Japan. The volume from South Korea is 15.6 kt (including 13.6 kt of PTA), occupying 36.62% of the total. The volume from Thailand took the second position, at 13.5 kt (including 13.2 kt of PTA), occupying 31.69% of the total. The volume from Japan stood at the third position, at 6.0 kt (including 5.0 kt of PTA), occupying 14.08% of the total. Average PTA stock cost is 5,014 yuan/ton in April (RMB/USD rate at 1:6.2), up 216 yuan/ton on month. Inventory Status and Operation of Chinese PTA Producers in China Yisheng lowered run rate of 2,000kt/yr PTA unit to 80% during the Labor day holiday due to some problems, and then raised the rate from 7 May. Yisheng Dahua shut down 3,750kt/yr unit in early May to change the catalyst, and restarted this unit on 6 May, which recovered normal operation on 7 May. FCFC Ningbo restarted 1,200kt/yr unit on 30 April following a maintenance shutdown on 7 April. However, this unit was shut down again on 8 May due to some problems and resumed operation on 11 May. On 14 May, Mitsubishi Ningbo shut down 700kt/yr unit for 25 day maintenance. On 20 May, Fujian Jialong restarted 600kt/yr unit that started maintenance last December. On 25 May, Yangzi Petrochemical Plant News tried to restart 600kt/yr unit that started maintenance on 21 April. During the course of restart, some new problems appeared, and the restart time was postponed to 2 June. Units still down in China: Yuandong s 4 units (3,200kt/yr in total); Liaoyang PC s 270kt/yr & 530 kt/yr units; Yangzi s two 350kt/yr units and 650 kt/yr unit; Yisheng Ningbo s 650kt/yr unit; Pengwei s 900kt/yr unit; BP Zhuhai s 650kt/yr unit; Jialong s 600kt/yr unit and Xianglu s 1,650kt/yr unit and 4,500kt/yr unit. By the end of May, the effective capacity in China amounts to 46,640kt/yr. Mar Apr May Jun est. Operating rate 72.4% 65.6% 68.3% Production (kt) 2,791 2,515 2,706 Inventory Slightly higher Slightly higher Slightly higher According to CCFEI estimate, China's productions of polyester filament, staple and bottle grade chips in April 2015 amount to about 2,213 kt, 362 kt and 523 kt respectively. Thus, the effective production of PET melt is estimated at 3,008 kt, which means the effective demand for PTA is at 2,587 kt. Import and export volumes of PTA in April amount to 42.6 kt and 55.6 kt respectively. Domestic PTA production is 2,515 kt based on CCFEI statistics, and PTA supply amounts to 2,502 kt, so the supply shortage emerges for the second time in 2015, at 85 kt. CFEI Comment Feedstock: The negotiation of Asian PX contract prices for June came to no result once again. PX market sentiment might revise slightly in a short term under the influence from some speculative factors like the fire on the refining unit of JX Nippon located in Kagoshima on 30 May and the following earthquake with a magnitude of 8 happened Japanese sea. Of the two units of JX Nippon, the bigger one was restarted two days later, while the smaller one remained in outage. The earthquake will not have a long term influence as the hypocenter is far from the locations of PX units in Japan. It s predicted that PX market will move up before declining in June. Supply: Xianglu Petrochemical will keep PTA unit in outage in June, so the supply volume will not change too much in the whole month. However, as the run rate of polyester industry is declining notably, it s hard to ensure PTA production will not be cut in the future. As a whole, accumulated inventories will be seen soon. Demand: The overall run rate of polyester sector in May has dropped by 4 percentage points from April, and it is expected to dip by another 4 percentage points in June. It s an undisputable truth that some factors like high inventory and traditional slack season have caused a reduction on the demand of polyester industry. To sum up, PTA market sentiment might revise up slightly in a short term under the influence from Japan s earthquake, the shutdown of JX Nippon s unit and the rebound on crude oil value. In a medium to long term, PTA market will probably brace a downward trend again. Players need to pay close attention to the price trend of crude oil and the operation situation of PTA units

6 China Report - MEG - May RMB USD Contract Prices from Majors (yuan/ton, $/ton) Month Up/down Range Pre. month May settled 450 7,850 7,400 Jun listed 600 7,500 8,100 May settled Jun listed ,100 1,140 1,000 1,020 USD based market: Sabic, Shell and MEGlobal announced their Asian contract nominations for June at $1,120/ton, $1,140/ton and $1,100/ton (CFR, L/C 90 days) respectively, up by $ /ton from May. RMB based market: Sinopec settled May contract price at 7,850 yuan/ton, up by 450 yuan/ton from previous month. Its May contract nomination was fixed at 7500 yuan/ton, down 600 yuan/ton from May. Average Spot Price (yuan/ton, $/ton) Week Time RMB based USD based Week 1 4May 8May 7,860 1,016 Week 2 11May 15May 7,678 1,000 Week 3 18May 23May 7, Week 4 25May 29May 7, Monthly Ave. in May 7, USD based MEG market retreated in May, with central values down by 9%. USD based MEG market saw limited spot supplies due to the problems on some units in early May, and prices firmed up. On 5 May, PTA futures market even witnessed a limit up. Under this influence, polyester fundamental market saw booming sales/production ratio for a certain time. As a result, central MEG values firmed up as well. Central trading values for arrived or to arrive at port cargoes surged to $1,015 1,020/ton, and bonded cargoes saw a premium of $5 10/ton. In mid May, polyester market started to weaken, with sales/production ratio and prices both declining. Moreover, Ningbo Zhongjin is expected to have products available from its new PX unit in July, enlarging the discount room for forward month PX cargoes. Market rumors said that Xianglu Petrochemical would bring PTA unit onstream in June. Under such comprehensive influence, the values of PTA spots and futures both softened. MEG sentiment was drawn down as well. Offers for arrived or to arrive at port cargoes plunged to about $990/ton, and central negotiations moved down accordingly. On 15 May, the shortselling power strengthened in PTA futures market after three major PTA warehouses were approved by Zhengzhou Commodity Exchange. Moreover, Ningbo Zhongjin started to feed PX unit on 19 May, and PX values fell by $41/ton on the same day. On 20 May, PTA futures TA1509 saw a limit down. Offers for arrived or to arrive at port cargoes once declined to $940/ton. At the end of May, after polyester run rate was lowered by 4 percentage points, central values of arrived or to arrive at port MEG cargoes plummeted again to $ /ton. Domestic market presented a performance similar to USD based sector in May, with central values down by 10%. In early May, domestic spot MEG offers basically fluctuated between 7,850 7,900 yuan/ton, and the sentiment was calmer than PTA market. The backwardation room between MEG spots and futures remained large, with month on month backwardation ranging between 100 yuan/ton and 200 yuan/ton. In mid May, central spot values fell to 7,200 7,250 yuan/ton in line with a decline on USD based value, and then rebounded by yuan/ton. In late May, spot values weakened further to 7,100 7,150 yuan/ton, and the backwardation room between MEG spots and futures dwindled to below 100 yuan/ton. The tank offtake in May decreased gradually. The volume from some major tanks was at 9,000 10,000 tons per day in the first half of May, while at the end of May, the number dropped to 6,000 tons per day. Monthly International MEG Value Trend Asia ($/ton, CFR China) Europe (Euro/ton, FD) USA (cts/lb, DEL) Apr May Jun est. Apr May Jun est. Apr May Jun est May MEG contract price in Europe was finally settled at euro 1,080/ton, rising by euro 135/ton from April, while that in the United States was settled at cts/lb, up by cts/lb from previous month. It s predicted that the contract prices for June will move down in line with Asian market trend

7 Statistics on MEG Imports in China (kt, $/ton) Origin Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Imp. Vol. Ave. Val. Saudi Arabia Chinese Taiwan South Korea Canada Singapore Others Total/Ave. Val , , According to statistics of China Customs, China s MEG imports in April 2015 totaled 784 kt, up by 84.2 kt on month, and the average price was at $858/ton, up by $49/ton from previous month. In April 2015, kt of MEG was imported from other Asian countries or regions, up by 95.9 kt on month and taking up 93.39%. Hereinto, the volume from Saudi Arabia ranked the first at kt, up by 39.8 kt on month and taking up 42.41%; Taiwan and South Korea followed, with volumes at kt and 62.2 kt respectively. As for deep sea cargoes, import volume from the USA was grew somewhat, at 10.5 kt in April, and that from Canada was at 41.3 kt, totally taking up 6.61% of the total. China imported very few from European countries. In April 2015, the average cost for MEG stock was around 5,727 yuan/ton (1 USD = 6.2 RMB), up by 375 yuan/ton from previous month. Plant News Stock Level and Operation Status of MEG Producers On 5 May, Tongliao GEM restarted 200kt/yr coal based MEG unit following a maintenance shutdown that started from 17 April, with run rate at 70 80% now. On 7 May, Jilin Petrochemical shut down 160kt/yr coalbased MEG unit for 45 day maintenance. On 8, May, Xinjiang Tianye shut down two coal based MEG units with a combined capacity of 100kt/yr due to the alteration of the railways, and restarted them in late May. On 20 May, Yangzi Petrochemical restarted 260kt/yr MEG unit that was shut down due to a blast on 21 April, with run rate at 70%. On 20 May, BASF Yangzi Petrochemical restarted 340kt/yr MEG unit that started maintenance on 30 March, with run rate at 70%. Other units in T/A: Liaoyang PC s 200kt/yr unit, Yanshan PC s 80kt/yr unit, units of Beijing Eastern Petrochemical, Yongjin Xinxiang s 200kt/yr unit and Hualu Hengsheng s unit. China Mar Apr May Jun est. Run rate (Oil based) 72.3% 68.5% 73.5% Production (kt) Inventory Low Low Low According to CCFEI, the outputs of PFY, PSF and BGPET chips in April were at 2,123 kt, 362 kt and 523 kt respectively. Based on these, the total production of polyester melt in April reached 3,008 kt, reflecting an effective demand for MEG at around 1,008 kt. Import volume of MEG in April was 784 kt and export volume was 0.2 kt, while domestic MEG production in April was assessed at 319 kt. Based on above data, MEG supply totalled 1,103 kt, so the supply surplus amounted to 95 kt (some surplus supplies were to meet demand from antifreeze sector). CCFEI Comment Feedstock: Now crude oil market firms up, and a peak time for oil consumption and a hurricane season will arrive in late July, which means there are certain speculative factors. However, crude oil values will mainly fluctuate in a wide range in June. Supply: MEG tank inventory in May decreased to below 500 kt. It s predicted that market supply will increase somewhat following the restart of two non coal based MEG units run by Sanjiang Petrochemical and Oriental (Shanghai) Petrochemical respectively, but there will still be a gap in the market supply in June. Demand: The overall run rate of polyester sector in May has dropped by 4 percentage points from April, and it will dip by another 4 percentage points in June. It s an undisputable truth that some factors like high inventory and traditional slack season have caused a reduction on the demand by polyester industry. To sum up, PTA market sentiment might revise slightly in a short term under the influence from Japan s earthquake, the shutdown of JX Nippon s unit and the rebound on crude oil value. In a medium to long term, PTA market will probably brace a downward trend again. Players need to pay close attention to the price trend of crude oil and the operation situation of PTA units. However, taking into consideration of low MEG inventory, MEG market still has strong capability to resist price drop

8 China Report - BGPET Chip - May Domestic Spot Price for Water Bottle Grade (yuan/ton) Time Price On week Week 1 4May 8May 7,965 Week 2 11May 15May 7,935 Week 3 18May 22May 7,765 Week 4 25May 29May 7,565 Monthly Ave. in May 7,808 USD-based Spot Price for Water Bottle Grade ($/ton) Time Price On week Week 1 4May 8May 1,111 Week 2 11May 15May 1,114 Week 3 18May 22May 1,078 Week 4 25May 29May 1,053 Monthly Ave. in May 1,089 Domestic market: Domestic BGPET chip market trended down in May, with central values losing up to 400 yuan/ton. Early this May in domestic BGPET chip market, central values made narrow fluctuations. At start of this month, in East China mainstream offers for water bottle grade chip were seen at 8,000 8,200 yuan/ton (ex works). Negotiations for deals of medium to small sizes were in the range of 7,900 7,950 yuan/ton (ex works), with talks at producers of low inventory at 8,000 yuan/ton (ex works), and large parcels of traders were talked lower. Later, given various bullish factors like tight PTA supplies in Zhejiang Province, wild guess that PTA plants are to be brought down, combined by oil price surge, polyester market turned active temporary. As for domestic BGPET chip market, offers were seen raised by 100 yuan/ton to 8,000 8,300 yuan/ton (ex works), and negotiated prices also climbed 100 yuan/ton. Nevertheless, though polyester market entered downward channel from May 8, but BGPET chip market was less vulnerable, with central values dipping to 7,850 yuan/ton (ex works) in more than a week. In PTA futures market, players have been going short for days, and BGPET chip market started to see bearish mood among participants due to the news that one Ningbo PX plant was fed on May 19 and was to yield products after 45 days. Given such background, BGPET chip market headed downward from late May, with central values dropping yuan/ton per day. Towards the month end, mainstream offers for water bottle grade chip in East China were pegged at 7,500 7,800 yuan/ton (ex works), and negotiations for medium to small parcels were in the range of 7,450 7,550 yuan/ton (ex works), with talks at traders and producers with large parcels lower. USD based market: USD based BGPET chip market mirrored the trend in the domestic market, with central values losing $60/ton. In early to mid May, USD based BGPET chip market remained stable, with mainstream offers fluctuating between the range of $1,110 1,120/ton FOB CMP and the range of $1,120 1,130/ton FOB CMP, or partly higher at $1,140/ton FOB CMP. Negotiations for firm deals hovered around $1,105 1,125/ton FOB CMP. Starting from mid May, under the influence of raw material markets and domestic BGPET chip market, offers in USD based BGPET chip market started to dip, with central values following down. By the month end, mainstream offers reached $1,050 1,060/ton FOB CMP, and negotiated prices were at $1,040 1,050/ton FOB CMP. Trading was muted. Monthly European BGPET Value Trend Contract (Euro/ton, FD) Spot (Euro/ton, FD) May 2015 May 2014 Jun 2015 est. May 2015 May 2014 Jun 2015 est ,080 1,040 1,090 1,080 1,150 1,050 1,120 European PET market headed north and then held stable on favorable demand. There were not a lot of changes in plant operations in May. EIPET still delayed the start up of its second 225kt/yr production line in Ain Sukhna, Egypt. Its first line of the same capacity was taken offline due to debt restructuring and is expected to be restarted in the fourth quarter. Lately in Asia, central values of BGPET chip have been sliding down, but demand downstream may appear strong when the temperature goes up as long as raw material markets do not plunge. Besides, Europe still needs large amount of imported materials. Thus under such circumstances, European PET market may continue to fluctuate at high price levels in June

9 Statistics on BGPET Exports in China (ton, $/ton) Destination Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Exp. Vol. Ave. Val. Exp. Vol. Ave. Val. Exp. Vol. Ave. Val. Exp. Vol. Ave. Val. Russia 2, , , ,328 1,277 Ukraine 2, , , ,071 1,288 Japan 28, , , ,370 1,294 The USA 5, , ,384 1,001 47,708 1,301 Croatia 3, , , ,743 1,255 Others 129, , , ,467 1,291 Total 171, , , ,687 1,290 China imported 2,322 tons of BGPET chips in April 2015, down by 2.6% from March The average import price for April is at $1,929/ton, down by 3.7% from March China's export volume in April totaled 171,347 tons, slightly down from March The average export price for April is at $954/ton, up 0.7% month on month. From above data we can see that China s export volume for BGPET chips is far larger than the import volume, with a net export volume of 169,025 tons, down by 4 tons from March In April 2015, among the destinations for China's exports, Japan ranked the first, with the volume taking up 15.5% of the total. India took the second place at 8.9%, and Egypt took the third at 6.1%. Stock and Operation Status of Chinese BGPET Producers Far Eastern Industrials carried out maintenance shutdown on its BGPET chip plant from May 26 due to electricity power issues, and will not restart it until June 10. This plant produces 350 tons of products per day. Plant News Recently in domestic BGPET chip market, producers started to trim operating rates by 10 30%. Run rates were at %. And real time operating rates dropped by 8 percentage points to 84% on May 27. Hereinto, Zhejiang Wankai operated at 60%, Yisheng Hainan at 80%, Far Eastern Industrials at 60%, China Resources at full capacities, Yizheng at 60~70%, Dragon Special Resin at full capacities and Sanfangxiang at previous run rates. China Mar Apr May Jun est. Operating rate 67.8% (77.0% under effective capacity) 76.9% (87.4% under effective capacity) 79.3% (90.1% under effective capacity) Production (kt) Inventory Normal Normal Normal In May, operating rates in BGPET chip market in China were commonly high most of the time except the month end, and thus the output overall increased significantly compared with last month. This month, sentiment in BGPET chip market cooled down obviously amid insipid trading, though large replenishing deals emerged sometimes and several beverage majors made enquiries. Inventory wise, stock levels reported at 2 3 weeks level, were seen to have climbed somewhat during May, though still in a safe rage given favorable order intake previously. CCFEI Comment Supply: Producers started to trim operating rates from the month end, and supplies in BGPET chip market may become less though one small plant may be restarted next month. Demand: Run rates of beverage factories were maintained at 70%. As buyers held a wait and see stance in May, leading to muted replenishment, those producers who haven t stock up enough on feedstock may have some demand in June, especially major producers and traders. But market mindset may still be prudent. Cost: International oil prices will still make wide fluctuations. PX market put on a strong performance on outages of two JX s PX plants with 600kt/yr capacities in total due to the fire at JX s Kashima oil refining plant on May 29. But this will only last temporarily. PTA market may rebound a bit on cost support; nevertheless, with several small units to be restarted later and demand to wither due to the decreasing run rates in polyester market, PTA market will tend to weaken. With tank inventory maintained below 500kt, MEG market will act in line with PTA market next month, but in a more active way. Besides, participants should be wary of PTA futures players going short. To sum up, The fire at JX s oil refining plant may lead to upward trend in many markets, and central values in BGPET chip market may follow up. But it won t last long. With the heat in the market fading away, market mindset may turn bearish again and BGPET chip market may fluctuate down a bit again. Market players are recommended to pay attention to oil price trend, plant operations in raw material and BGPET chip markets, and run rates at downstream beverage factories

10 China Report - FGPET Chip - May Settlements from Majors (yuan/ton) Month Sinopec East China South China SD Bright SD Bright SD Bright Mar 6,550 6,550 6,600 6,600 6,700 6,700 6,650 6,750 Apr 7,250 7,250 7,300 7,300 7,400 7,400 7,350 7,450 May 7,550 7,650 7,550 7,650 7,600 7,650 7,750 7,750 Nominations from Majors (yuan/ton) Month Sinopec East China South China SD Bright SD Bright SD Bright Mar 6,800 6,800 6,800 6,800 6,850 6,900 6,900 Apr 7,100 7,100 7,000 7,000 6,900 6,900 6,950 May 7,900 7,900 7,900 7,800 7,800 7,900 8,000 8,000 7,950 Spot Average Price (yuan/ton) Week Time SD Week on Week Week 1 4May 8May 7,425 Week 2 11May 15May 7,385 Week 3 18May 22May 7,125 Week 4 25May 29May 6,900 Monthly Ave. in May 7,209 Semi Dull PET Chip: In May, SD chip market in Jiangsu and Zhejiang headed south, with central values losing 600 yuan/ton in total. At the month start, offers were placed at 7,400 7,600 yuan/ton (cash), while negotiations for medium to small sized deals and large volume deals were in the range of 7,350 7,400 yuan/ton (cash) and 7,200 7,300 yuan/ton (cash) respectively. Later, due to various bullish factors like tight PTA supplies in Zhejiang Province, wild guess that PTA plants were to be brought down and oil price surge, polyester market turned active temporarily. In SD chip market, offers bounced slightly back to 7,450 7,700 (cash or D/A), and central values followed up to 7,450 7,550 yuan/ton (cash). Nevertheless, the market entered downward channel starting from May 8. On one hand, players in PTA futures market were going short, and one PX plant in Ningbo was fed on May 19, with products to be yielded 45 days later. On the other hand, low prices emerged frequently in PET chip market. Under such circumstances, central values of SD chip dipped by yuan/ton per day, unstoppable even after contract prices settled high late this month. By the month end, mainstream offers reached 6,800 6,950 yuan/ton (cash), and negotiating and trading prices of firm deals were in the range of 6,750 6,850 yuan/ton (cash). Super Bright PET Chip: In May, SB chip market in Jiangsu and Zhejiang showed similar performance as SD chip market, with central values dipping over 600 yuan/ton. At the beginning, offers for SB chip were placed at 7,400 7,600 yuan/ton (cash), and negotiations were done around 7,300 7,400 yuan/ton (cash). Then prices started to head downwards after a short fluctuation. By the month end, offers reached 6,800 6,950 yuan/ton (cash), with a few high at 7,200 yuan/ton (cash), and negotiations followed down to 6,750 6,850 yuan/ton (cash). Trading was insipid. CDP Chip: In Jiangsu and Zhejiang, CDP chip market had narrow fluctuations in early May and then ranged bound in mid to late May. At the start, CDP chip market fluctuated a bit. Mainstream offers hovered in the range of 8,500 8,600 yuan/ton (cash), with high ends maintained at 9,310 yuan/ton (cash). Negotiating prices for firm deals were at 8,300 8,400 yuan/ton (cash). Starting from mid May, offers went lower in line with raw material markets, and had not stopped by the month end. Thus at the end of the month, mainstream offers were at 8,000 yuan/ton (cash) or higher at 9,000 yuan/ton (cash). Talks were at 7,800 7,900 yuan/ton (cash). Trading was muted

11 Statistics on FGPET Imports in China (ton, $/ton) Origin Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Imp. Vol. Imp. Val. Imp. Vol. Imp. Val. Imp. Vol. Imp. Val. Imp. Vol. Imp. Val. Malaysia 634 2, ,556 1,472 2,359 1,573 2,562 Taiwan 2,196 1,229 2,755 1,188 7,497 1,270 6,921 1,623 S Korea 2,978 2,010 3,244 1,919 13,693 1,823 14,101 1,966 USA 2, , , ,383 1,401 Japan 2,852 1,302 2,236 1,302 7,052 1,352 6,605 1,835 Others 1,601 1,304 1,793 1,499 5,577 1,536 6,520 2,234 Total 13,029 1,525 13,241 1,495 43,406 1,549 48,103 1,809 China s PET chip import volume in April rose to 13,241 tons, 212 tons higher than 13,029 tons in March. Average import price in April is at $1,495/ton, down by $30/ton from March. Export volume rose by 3,950 tons or 31.6% to 16,469 tons, compared with 12,519 tons in March. Average export value is at $1,051/ton, down $15/ton from $1,066/ton in March and $444/ton lower than import value. Net export volume for April reaches 3,228 tons. Of all import origins in April, the materials from South Korea, Chinese Taiwan, Malaysia, Japan and the USA account for 86.5% of the total import volume in China, down by 1.2 percentage points from March. Stock and Operation Status of Chinese FGPET Producers Plant News Jiangsu Hengli took its 200kt/yr polyester plant that mainly produces SD chips offline on May 12, with restart date pending. Xiaoshan Shuangtu reduced operating rates of its polymerization plant on 28May, cutting POY and FDY production each by 200 tons/day. The date to ramp up run rates is still pending. Rongsheng planned to shut a 200kt/yr POY unit in mid June for turnaround. The company will reduce the production of another bright FDY unit by 400 tons/day from 5 Jun, for half a month. Jiangsu Xinmin took 200kt/yr FDY unit down from May 20 for maintenance lasting about one month. Zhejiang Guxiandao took maintenance shutdown on its 100kt/yr SD chip plant from May 29, and another 50kt/yr SD chip plant was also restarted. Mar Apr May Jun est. Run Rate 42.8% 43.9% 42.4% Production (kt) Stock Normal Normal Normal One PET chip plant was taken offline for maintenance in early to mid May, and production in polyester market was also slashed towards the month end. Thus PET chip production decreased compared with last month. Trading in the month was insipid overall. In early to mid May, large volume deals emerged sometimes, and trades increased in some regions. In mid to late May, deals transacted at low prices started to be seen in the market. Inventory wise, stocks at PET chip producers remained stable at weeks worth, with some increasing a bit, but still at low levels. Downstream chip based spinning mills were operating at high rates, though dipping a bit at the month end. By the month end, run rates were at 65 75% in Xiaoshan and Shaoxing, 65 75% in Zhuji and Cixi and 75% in Changshu. CCFEI Comment Feedstock: International oil prices will still make wide fluctuations. PX market put on a strong performance on outages of two JX s PX plants with 600kt/yr capacities in total due to the fire at JX s Kashima oil refining plant on May 29. But this will only last temporarily. PTA market may rebound a bit on cost support; nevertheless, with several small units to be restarted later and demand to wither due to the decreasing run rates in polyester market, PTA market will tend to weaken. With tank inventory maintained below 500kt, MEG market will act in line with PTA market next month, but in a more active way. Supply: From late May, producers in polyester market gradually carried out their plans to cut production or take plants offline, causing run rates to drop by 3 4 percentage points. Run rates may still go lower by 3 4 percentage points next month. Thus PET chip output will decrease, though one CDP chip plant may be restarted in mid June. Demand: With operation rates in polyester market declining, chip based spinning mill will also be operating at lower rates, and textile industry is about to enter low season. Under such background, deals will only be done on a need to basis, though replenishment may be stimulated temporarily early next month due to the fire at JX s refinery. To sum up, PET chip producers see poor margins at current stage. Though the market may bounce back a bit in early June in line with raw materials, it may soon see bearish mood spreading, and become weak again. Market players should also pay close attention to oil prices, dynamics of upstream feedstock and downstream plants and operations of chip based spinning mills

12 China Report - Polyester Filament - May Contract Prices from Majors (yuan/ton) Time POY150D Settled Listed 4May 9May 8,850 9,000 11May 15May 8,900 9,000 18May 22May 8,650 8,800 25May 29May 8,100 8,000 Average Spot Price (yuan/ton) Week Time POY150D DTY150D FDY68D Week 1 4May 9May 8,600 10,130 9,870 Week 2 11May 15May 8,440 10,100 9,740 Week 3 18May 22May 7,951 9,740 9,320 Week 4 25May 29May 7,595 9,350 9,040 Week 5 Monthly average in May 8,147 9,830 9,493 Y/T Y/T In May, crude oil market was largely on a range bound this month, unable to provide downstream market with decent support. WTI crude oil fluctuated at around $50 60/bbl amid stronger US dollar and a surprisingly lower oil inventory. PX market was weak after the unsettled ACP in June, and PTA remained on weak correction on soft cost and fundamentals. On the other hand, MEG price remained at relatively high levels thanks to low inventory level. PFY price fell back to early April level as the bullish impact of several explosions wore off. In May, PFY producers reported an increasing growth rate in inventory level because sluggish sales. In the middle of May, a few PFY plants shut down for turnaround, and another few make production cuts at the month end. Therefore, PFY production may drop notably in June. Early in May, Crude oil kept fluctuating, and June ACP for PX ended up unsettled, both unable to support downstream market. PFY market sentiment was generally bearish. Producers focused on promoting sales, but total sales in the market were still limited. Nevertheless, prices were stable as sales/production performance was balanced thanks to deliveries of previous orders. Sales/production ratio was averaged at 70 80%, and mainstream price of POY150D/48F was at 8,625 yuan/ton. In the middle of May, PFY prices weakened as upstream feedstock price fell back to rational levels, and the resulting sluggish buying interest dampened PFY price further and then upstream feedstock market. The overall market sentiment was bearish. The average sales/production was seen at 70 80%, and POY150D/48F price slid to 7,800 yuan/ton. In late May, Polyester feedstock market was still on a weak correction. Downstream textile enterprises kept buying on a need to basis. There was no support from upstream cost or from downstream demand. PFY producers kept offers mostly unchanged at the moment. POY150D/48F price declined to 7,450 yuan/ton. PFY inventory increased notably in May. The numbers for POY were mainly at days worth, while those for DTY and FDY were at days worth and days worth respectively. Operation Status of Downstream Textile Sector Mar Apr May Jun est. Operating Rate 70% 75% 70% Fabric Inventory 40 days 36 days 43 days Well sold Products Knitted fabrics, water jet fabrics and the fabrics for casual wear The average run rate at textile enterprises dropped a little in May. A decent number of circular knitting machines were shut due to limited order intake and low fabric prices. Nevertheless, the extensive shutdown had not extended to other kinds of weaving and knitting machines, which were currently operating at an average run rate of below 70%. Fabric: Daily trading volume in Textile City of China gradually decreased with falling upstream cost. Fabric sales peaked at million meters/day, and trading price was rather stable. Fabric produced from higher feedstock was sold at a lower price when upstream feedstock market was on a downtrend. Therefore, textile enterprises were facing cash flow problem. But fabric price is not likely to increase during the transition period. Fabric for spring and summer cloth, including casual wear fabric, knitted fabrics and some water jet fabrics, was most frequently traded. International PFY Price W. Europe (DEL, $/T) The US (DEL, $/T) Taiwan (DEL, $/T) 167dt POY 167dt DTY 150D/48 132F POY 150D/48 132F DTY 230D POY 150D DTY / 1,757 1,802 2,425 2,513 3,175 3,351 1,215 1,247 1,641 1,707 BCF market was stable to firm in North America in May. PFY sales hit another new high in May, and the total sales in Q1 grew 15% on year. Carpet industry has the highest profit, followed by garment and automobile use textile, which were boosted by strong demand. In Europe, PFY export was still high thanks to rapid recovery in automobile and manufacturing industry, low PIF import price and stronger Euro

13 Statistics on Exports of Chinese PFY (tons, $/ton) Destination Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Turkey 17,319 1,326 18,655 1,371 62,552 1,392 65,765 1,698 Pakistan 14,538 1,408 16,350 1,410 55,797 1,732 48,020 1,728 Egypt 8,196 1,189 12,004 1,200 35,002 1,238 59,585 1,494 South Korea 14,343 1,650 14,990 1,569 49,224 1,647 52,416 1,995 Vietnam 22,735 1,374 18,529 1,395 63,330 1,453 55,052 1,702 Others 71,222 1,683 73,146 1, ,904 1, ,914 2,028 Total 148,352 1, ,674 1, ,810 1, ,060 1,875 China exported 153.7kt of PFY in Apr 2015, up 5.4 kt or 3.51% month on month. The average export price is at $1,538/ton, up $2/ton or 0.13% month on month. In April, China imported 10.5 kt of PFY, down by 1.1 kt from March. The average import price is at $2,588/ton, an increase of $127/ton from $2,461/ton in March. Exports to Turkey totaled 18.6 kt in Apr 2015, up 6.99% from March, ranking the first and accounting for 12.1% of the total in the month. Exports to Vietnam decreased by 18.5% month on month to 18.5 kt, ranking the second and accounting for 12.04% of the total, followed by Pakistan, South Korea, Egypt and etc. Stock and Operation Status of Chinese PFY Producers Plant News 1. A 200 kt/yr PFY Unit at Shengze Xinmin was shut on 18 May for a month long turnaround. The unit mainly produces FDY. 2. Rongsheng planned to shut a 200 kt/yr POY unit in mid June for turnaround. The company will reduce the production of another bright FDY unit by 400 tons/day from 5 Jun, for half a month. 3. Xiaoshan Shuangtu reduced operation rate on 28 May, cutting both POY and FDY production by 200 ton/day. It is unknown when the run rate will go up again. 4. Shaoxing Nanfang brought down two semi dull FDY lines and one bright FDY line on 28 May, cutting production by 100 ton/day. China Mar Apr May Jun est. Run rate 73.2% 75% 73.06% Output (kt) 2,042 2,123 2,213 Inventory Normal Normal Normal In April, Taking maintenance and shutdowns into consideration, PFY capacity running in April totaled slightly above 400 kt/yr. Average operation rate decreased a little from last month, but the total production was still higher as operation rate was relatively high early in the month and May is one day longer than April. Meanwhile, PFY sales were tepid throughout the month as crude oil fluctuated and the effect of explosions wore off. The average sales/production ratio in May was only at 50 60%. CCFEI Comment Raw material: PX ACP ended up unsettled in June. It would have been encouraging if the contract price had been settled, but there is also no harm now that it wasn t. Polyester chain was no longer driven by the weakening PX market, and crude oil was fluctuating in wider range due to increasing supply from the Middle East. Oil producers may not reduce operation rate in the next OPEC meeting, and oil price is likely to keep fluctuating within $50 60/ton. PTA price is expected to remain on the downtrend due to weak fundamentals and high inventory. MEG, on the other hand, is expected to range bound at high level, shrugging off PTA market. Supply: The inventory level at PFY producer rose to reasonable levels now that sales have been only modest throughout the month. There was no tightness seen in the market. But the average run rate at chemical fiber plants will inevitably decline in June due to planned maintenance and more stringent pollution controls for dying and printing house. Nevertheless, supply is still able to cover downstream demand. Demand: June is traditionally low for textile industry, and there were even fewer orders right after enterprise made the transition. In addition, power rationing will be in place once temperature is high. Textile enterprises were having cash flow problem because they were unable to raise fabric price. Therefore, PFY demand is expected to sluggish in June. All in all, PFY producers were facing a slow June, given low feedstock cost, sluggish demand and increasing inventory level. PFY market is likely to remain weak in June. It is necessary to watch crude oil and PTA price trend, and operation rate at PFY producers and downstream textile enterprises

14 China Report - Polyester Staple - May Contract Settlements and Nominations (yuan/ton) Month Sinopec (Delivered) Private producers (Ex works) Mar settled 7,550 7,300 Apr settled 7,850 7,650 May settled 8,250 8,050 Jun listed 8,250 / Sinopec nominated June contract prices for 1.4D semi dull PSF at 8,250 yuan/ton (delivered), and also issued its contract settlement for May at 8,250 yuan/ton, a rise of 400 yuan/ton from previous month PSF and Cotton Prices in China (yuan/ton) Week Time PSF 1.4D Cotton 3128B Week 1 4May 8May 8,022 13,401 Week 2 11May 15May 8,004 13,376 Week 3 18May 22May 7,792 13,362 Week 4 25May 29May 7,755 13,328 Monthly Ave. in May 7,893 13,367 PSF market prices fluctuated downward as a whole in May on the back of weakening costs and for lack of demand, and the values basically retreated to 7,700 yuan/ton by the end of May. Early May: Yisheng cut run rates of two PTA units slightly due to some problems on 6 May, and then sources in polyester market, who were very sensitive to the changes on the operations of PTA units spread various rumors. Together with the influence from opening and running high of futures, PSF producers also raised offers by 150 yuan/ton in line with polyester fundamental market, with numbers reaching 8,100 yuan/ton, the highest level of May. Downstream enquiring and trading sentiment also warmed up slightly at first, and then weakened slightly after the rumor collapsed itself. Mid May: Central values in PSF market weakened continuously following an inch down on polyester fundamental market for lack of favorable factors. As a result, there were limited downstream enquiring and buying activities, and some sporadic parcels for rigid demand were mainly traded at low prices as well. Under this circumstance, PSF producers saw product inventories growing gradually. With inventories accumulating, PSF producers had to lower prices further in order to sell goods. With the situation going from bad to worse, PSF offers declined all the way to slightly higher than 7,700 yuan/ton. Late Mar: On 21 May, international crude oil futures closed with a significant price rise, and On 22 May, PTA futures opened with a healthy trend. Hence, most PSF producers also took this chance to raise offers by 100 yuan/ton following a long period of downward trend. Downstream spun polyester yarn producers reported good enquiring and buying sentiment, which, however, was far from expected. After the favorable factors from overnight crude oil values disappeared, PSF market started to inch down again, which continued throughout the end of May. On 29 May, crude oil value closed higher, and Japan s JX Nippon Oil and Energy suffered a fire in the afternoon of the same day. On 30 May, PSF offers were picked up again by 100 yuan/ton. However, as it was a Saturday, there was no price guidance, so the market entered into a short term range bound trend, with players holding wait and see stance. At the end of May, mainstream offers for 1.4D melt directly spun PSF in Jiangsu and Zhejiang were between 7,750 7,850 yuan/ton ex works, totally dropping by 350 yuan/ton from the same period of previous month. Monthly International PSF Value Trend Chinese Taiwan (DEL, $/ton) Europe(DEL, $/ton) USA(DEL,$/ton) Apr May Jun est. Apr May Jun est. Apr May Jun est North America: PSF liquidity maintained strong momentum from April to early May. The demand for medium tenacity PSF was relatively better as nonwoven fabric sales continued to see seasonal improvement. PSF imports in the United States during the past two months grew by 13% from the same period of previous month in spite of a strike in the ports of the west coast of the USA. As expected, with PX settlement price for April picking up, PSF profits increased as well. Based on current spot prices of raw materials, PSF prices are expected to inch up further in late May. West Europe: PSF transaction was healthy in April, against continuously weakening imports. Based on rising costs for Asian raw materials, some major enterprises raised offers. Some producers kept high run rates and low inventories. It s predicted that offers for Q3, 2015 will move up, while the influence has gotten smaller. Producers and traders were more inclined to use monthly indication price under the influence from the competition between raw materials and imported products, and such a pricing method is more and more widely accepted.

15 Statistics on Exports of Chinese PSF (kt, $/ton) Destination Mar 2015 Apr 2015 Jan Apr 2015 Jan Apr 2014 Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. Exp. Vol. Exp. Val. US ,137 Pakistan , ,287 India , ,335 Mexico 1.8 1, , , ,341 Israel 3.6 1, , , ,351 Others 37 1, , , ,371 Total/Ave. Val , , , ,310 According to the Customs, China imported 12.4 kt of PSF in April 2015, down by 0.4 kt from March, with its average import price $105/ton higher on month at $1,576/ton; China exported 84.6 kt of PSF in April, an increase of 6.1 kt on month, with average export price $5/ton lower on month at $1,084/ton. South Korea, Chinese Taiwan and Thailand rank the top three regions that exported PSF into China Mainland in April 2015, and the top three export destinations of ex China PSF remained the US, Pakistan and India. Stock Level and Operation Status of Chinese PSF Producers Plant News Jiangsu Xiangsheng Chemical Fiber shut down Suqian based 200kt/yr PSF plant in September 2014, with restart time pending. Zhejiang Yuandong Chemical Fiber shut down 200kt/yr PSF plant at the end of March, with restart time pending. Zibo Wanjie started to feed raw materials to its melt directly spinning PSF plant in the afternoon of 29 April. This unit, which has been shut down for a long period, has had products available from early May, and is now producing 300 tons of PSF per day. China Mar Apr May Jun est. Operating rate 65.5% 65.3% 66.4% Production (kt) Stock Level Low Low Low In May, PSF running rates surged and supply volume in turn mounted up. As end users could not sell goods successfully, the buying enthusiasm of PSF traders and downstream yarn mills weakened notably, and only rigid demand for small parcels could be found. The overall inventory at PSF producers grew from previous month, with mainstream inventory at around days worth in end May. CCFEI Comment Raw materials: July international crude oil value closed at above $60/bbl once again on 29 May owing to shrinkage on the inventory in the United States, and the price will probably continue to fluctuate in the future. No Asian PX contract price was nominated for June 2015 due to a large spread between buyers and sellers. It s the fourth time Asian contract price negotiation for PX gained no result in It s predicted that PX market will keep on moving forward in weakness. The real time run rate for PTA industry in China was 66.3% on 29 May, and some other units were scheduled to resume operation in the future. Players should be cautious of a release of short selling emotion. Demand: As it is a busy harvest season in North China in the first half of June, some small yarn mills have shutdown plans. Thus the run rate of spun polyester yarn producers will decline, and the rigid demand for PSF will dwindle as well. At the end of May, fabric producers still had high inventories, and the sale of spun polyester yarn was unsmooth as a whole. Thus sellers mainly provided discounts for PSF, while buying interest weakened as well. Supply: Zibo Wanjie had products available in May, and the real time run rate of polyester industry was picked up to 66.5% (with effective production capacity at 6,740kt/yr). However, June is a traditionally slack season for textile industry. Polyester producers were mainly pessimistic about market trend, and some PFY and polyester chip producers have started maintenance or cut run rates. So the run rate of polyester industry will also be lowered slightly. To sum up, the cost support to PSF market will weaken in June as Asian PX contract price negotiation gains no result while PTA supply keeps on rising. The demand for PSF will move south in a line with a decline on the run rate of spun polyester yarn industry. In view of weakening situation in both upstream and downstream, PSF market is very likely to inch down continuously. Players need to pay close attention to the price trend of crude oil and the operation situation of PTA units in June

16 China Report - R-PET fiber - May Hollow R-PSF Value Trend (yuan/ton) Variety (6 15D siliconized) Trend Value 3 D crimped in Jiangsu & Zhejiang 40 7,795 3 D crimped in Guangdong (pre VAT) 52 6,888 2 D crimped whitened in Cixi (whitened) 25 7,200 R PET fiber market was mainly in weak corrections during the month, as demand withered given the softness of virgin PET market in May: seeing prices for R PFY obviously heading south, offers for cotton type R PSF in small downticks, and those for hollow R PSF inching lower amid thinner transactions. In Jiangsu and Zhejiang, 3 D crimped hollow R PSF market stepped into the dull season, seeing thinner transactions and mainstream offers for siliconized goods down to 7,600 7,800 yuan/ton (VAT included). Overseas demand was little improved, and mainstream export offers for siliconized products remained at $1,090 1,100/ton FOB. In Guangdong and Fujian market, prices for 3 D crimped hollow R PSF were revised a bit higher, but buyers continued to show resistance, seeing offers for siliconized goods in the range of 6,700 7,200 yuan/ton (VAT excluded). Lately, producers were under increasing pressure from high stockpiles. In Cixi of Zhejiang, hollow R PSF sustained the mild adjustments, with producers sitting on higher inventory due to sluggish transactions. Offers for siliconized and whitened products were at 7,100 7,300 yuan/ton (VAT included). Cotton-type R-PSF Value Trend (yuan/ton) Variety (in Jiangsu and Zhejiang) Trend Value High tenacity low elongation virgin like 1.5D 114 6,871 High pressure spun virgin like 1.5D 79 6,652 High quality raw white 1.5D 73 6,400 High quality raw white 1.5D (SW China) 162 6,538 Low quality raw white 1.5D 6,150 R POY150D/96F 45 7,305 Prices for cotton type R PSF drifted lower due to unfavorable buying activities, seeing discounts largely available in firm deals. Mainstream offers for high tenacity & low elongation virgin like goods tumbled to the range of 6,800 7,000 yuan/ton (ex works, VAT included), and those for high pressure spun virgin like R PSF were at 6,650 6,700 yuan/ton (VAT included). In Jiangsu and Zhejiang, central offers for 1.5D high quality raw white regular R PSF were at 6,400 yuan/ton (ex works, VAT included); while those in Southwest China moved lower to 6,600 6,700 yuan/ton (ex works, VAT included). During the same period, R PFY sector tracking the losses in virgin PFY prices, seeing inventory pressure increase at producers given thinner sales. Mainstream offers for R POY 150D plunged to 7,100 7,300 yuan/ton (VAT included) by month end. Bottle Flake Price Trend Clear flake, for 3 D crimped R PSF Clear flake, for regular R PSF Clear flake, for R PFY Green flake, for spinning Average in May 5,335 4,982 5,542 4,750 Forecast for Jun Virgin PET market saw prices corrected lower in May, when the tightness in feedstock availability was eased after the restart of some PTA units, which also led R PET fiber to retreat as well, with prices inching lower to around 350 yuan/ton above before explosion level and nearly 200 yuan/ton higher than those started the year. Under such circumstances, bottle flake market was somehow underpinned by short raw material supply in rainy days, with downticks limited within 100 yuan/ton and some even higher. In Jiangsu and Zhejiang, ex works prices for clear flakes ready to spin R PFY closed at 5,500 5,700 yuan/ton (ex works, VAT excluded); meanwhile, procuring values for baled bottles were at 4,500 4,700 yuan/ton (80% for clear bottles, including 7% moisture in weight). Trading prices for hot washed clear flakes ready for spinning 3 D crimped hollow R PSF were at 5,300 5,400 yuan/ton, with those ready for spinning virgin like R PSF at 5,150 yuan/ton, and central purchasing prices for post consumer bottles at 3,300 3,400 yuan/ton. Mainstream prices for green flakes to produce cotton type fibers closed at 4,700 yuan/ton (delivered, VAT excluded). In Guangdong, mainstream prices for hot washed clear flakes ready for spinning 3 D crimped hollow R PSF were at 5,300 5,400 yuan/ton (delivered, VAT excluded). In Southwest China, offers for clear flakes ready for spinning were at either side of 4,700 yuan/ton (delivered, VAT excluded). Mainstream offers for imported hot washed clear flakes ready to spin 3 D crimped R PSF were at $ /ton CFR SE Asia