RESEARCH REPORT SCI99.COM ISSUE NUMBER 168 Jul 12, 2012 WEEKLY COMMODITY MARKET RESEARCH REPORT Weekly Focus The international commodity market was volatile this week. Weak demand in China exerted pressures on the China commodity market. During this week, commodity prices were mixed in China. Among 98 products surveyed by SCI, the number of products suffering price decreases added to 38, accounting for 39% of the whole. 43 products enjoyed hikes in prices, accounting for 44%. Prices of 17 products remained stable. Seasonal adjusted May exports and imports were €93.5 billion and €78.5 billion respectively, rising by 3.9% and 6.3% month on month, Germany's Federal Statistical Office reported Monday. The Employment Trends Index slid to 107.47 in June, down from the revised figure of 108.23 in May, which was first reported as 108.34, according to a report released Monday by the Conference Board. The June figure is 5.6 percent higher than a year ago. China's Consumer Price Index rose by 2.2% in June from a year earlier, yet it was down by 0.8% compared to May, the lowest since January 2010. Meanwhile, China's Producer Price Index fell by 2.1% from a year earlier, decreasing by 0.7% on a month-on-month basis, data suggested published by the National Bureau of Statistics of China on July 9. Finance ministers of euro zone states on some of the details of Spanish bank bailout plan reached a political consensus, promising to extend the deadline for the correction of the excessive deficit in Spain by one year to 2014. They are aiming at reaching a formal agreement in the second half of July, and they are in for a first disbursement of 30 billion euros by the end of this month The international commodity market corrected widely this week affected by Eurozone finance ministers meeting, Fed meeting and key global economic data. Last Friday, US nonfarm payrolls, which were a little worse than expectation, made investors worry that the ongoing European debt crisis was dragging economic recovery in the US. Accordingly, commodity prices met resistance in rebounding. Panicky sentiment among the international commodity market somewhat eased driven by anticipation of more loose monetary policies to be released in China. Most commodities experienced price hikes this week. RESEARCH REPORT Energy Market Crude oil Oil Analysis The US Department of Labor showed Figure 1: Crude Oil Price Movement, USD/bbl that nonfarm employment figure was lower-than-expected in Jun, triggering the stock market tumbles and bulk commodity selling, and international crude oil prices dipped 3% last weekend. Later on, the shutdown of crude oil industry caused by a dispute between oil workers and employers in Norway guided the international crude market. From this point of view, international crude prices didn’t see large changes on the general level but fluctuated within a fixed range. Table 1: Natural Gas Futures Prices, USD/mmBtu Outlook Weekly Average Nat. Gas Jul 11 Current Prior Geopolitical situation, indicators from Change Week Week major economies and the US crude NYMEX stocks still play a key role influencing 2.94 2.98 2.75 +0.23 Futures crude prices. According to SCI, Table 2: LPG Closing Prices in E-China, Yuan/mt international crude oil prices will LPG Jul 12 Jul 5 Change keep moving downward in the short China-origin 5805 5580 +225 run, the direct reason is the bullish Imports 5600 5400 +200 sentiment stemming from the investment funds. However, crude prices will still be difficult to step on a long-term rise under the depressed global economic situation, even though many governments are trying to prevent economic growth slowing down via various regulations and reforms. Table 3: WTI and Brent Prices, USD/bbl Weekly Average Monthly Average Product Jul 12 Current Prior Change Jul Jun Week Week WTI 85.81 85.48 83.52 +1.96 85.54 82.41 RESEARCH REPORT Brent 100.23 99.48 97.39 +2.09 99.40 95.96 Gasoline and Diesel National Development and Reform Commission (NDRC) cut gasoline and diesel prices for the third time this week. After the price cut, some major state-owned refineries drove up diesel prices, while gasoline prices remained unchanged or drifted down. Traders with low inventories replenished proper amounts but were still cautious and market transactions picked up to a certain extent. The average wholesale price of 93RON gasoline stood at Yuan 8,760/mt this week, sliding Yuan 179/mt over last week; and that for diesel 0 was Yuan 7,475/mt, with a reduction of Yuan 24/mt over last week. Table 4: Domestic Gasoline and Diesel Spots Prices, Yuan/mt Sinopec & PetroChina Local Refineries in Shandong Product Jul 12 Weekly Change Jul 12 Weekly Change Diesel GBⅡ0# 7450 -50 7274 -10 Gasoline 93 RON 8900 -100 8052 +78 Fuel Oil Influenced by climbing international crude oil Table 5: Fuel Oil Prices, Yuan/mt prices, 180cst fuel oil market was boosted by Fuel oil Jul 12 Jul 7 Change the rising price of coking material in Shandong. Spot 4590 4590 0 At present, demand fundamental for 180cst fuel Futures 4699 4709 -10 oil was still weak dragged down by depressed shipping market, which played a key role suppressing fuel oil price rises. The short-term market will rebound largely depended on the upbeat crude market. Financial Brief Finance Table 6: Major Global Stock Indexes Stock Index 12-07-04 12-07-11 Change SSECI 2227.32 2175.38 -51.94 DOW 12943.82 12604.53 -339.29 NASDAQ 2976.08 2887.98 -88.1 FTSE 100 5684.47 5664.48 -19.99 RESEARCH REPORT The international financial market NIKKEI 9104.17 8851 -253.17 corrected downwards this week, which were typically attributed to the movement of the European debt crisis and economic readings of global major economies. Along with the spread of the debt crisis in the eurozone and the economic slowdown in China, risk appetites drifted lower. In addition, June nonfarm payrolls were mild in the US last week, sharpening fears regarding US economy to stagnate. Subsequently, the financial market moved up as EU leaders agreed to support the Spanish banks. However, Italian Prime Minister Mario Monti reiterated that they needed no bailout, which triggered market panic. According to SCI, in spite of some progresses in the debt crisis in the European continent, market confidence remained insufficient. Moreover, the US was struggling on the way of economic recovery. In general, the short-term market is expected to undergo some fluctuations. The financial market in China was not so satisfactory. Inflation pressure eased based on June CPI, which provided more room for the macro-economic regulation. However, continual declines in PPI and negative import & export figures also sent a negative signal. In response, market prices suffered some contractions amid thick wait-and-see sentiments among investors. Above all, expectations for loose policy were especially high. Furthermore, Premier Wen Jiabao also said we would carry out proactive fiscal policy. Therefore, the future market will be comparatively positive. Currency Market Risk aversion sentiment remained Table 7: Exchange Rates of Major Currencies strong in the foreign exchange Exchange Rate 12-07-04 12-07-11 Change market and the US dollar sagged USDX 82.24 83.43 +1.19 firstly and then climbed this week. USD/YUAN 6.3121 6.3209 +0.0088 The odds on releasing the QE3 USD/JPY 79.91 79.60 -0.31 are small, as well as the EUR/USD 1.2517 1.2244 -0.0273 expectations on treasury secretary GBP/USD 1.5582 1.5507 +0.0075 meeting held in the euro zone pulling back the euro from low, suppressing the US dollar rise. Later on, some progresses were made on the treasury secretary meeting about the Spanish debt crisis, but they failed to buoy the market sentiment; at the same time, the Fed showed that no bonds purchase will occur unless the US economy worsened. As a result, risk currencies declined quickly under big pressure. In addition, China import data in June was lower-than-expected, hurting non-US dollar currencies further. According to analysis, the US dollar will remain firm against the euro in the near term. Futures Market Table 8: Closing Prices of Main Domestic Commodity Futures Contracts Contract 07-05 07-12 Change L1209 10085 9965 -120 V1301 6690 6530 -160 TA1209 7692 7480 -212 RESEARCH REPORT Fu1209 4709 4699 -10 Ru1209 24165 23880 -285 Cu1210 55700 55150 -550 Al1210 15680 15470 -210 Zn1210 14850 14645 -205 Au1212 333.8 324.7 -9.1 The international commodity market corrected widely this week affected by Eurozone finance ministers meeting, Fed meeting and key global economic data. Last Friday, US nonfarm payrolls, which were a little worse than expectation, made investors worry that the ongoing European debt crisis was dragging economic recovery in the US. Accordingly, commodity prices met resistance in rebounding. Subsequently, results at Eurozone finance ministers meeting, Fed meeting disappeared the market, leading to drops in commodity prices. Crude values continued the volatility while the Table 9: Closing Prices of Main Foreign Commodity Futures agricultural market showed Contracts a strong tendency. Soft Contract Unit 07-04 07-11 Change economy remained TOCOM NR JPY/kg 254.8 243.3 -11.5 impacting on the market, COMEX hence the international USC/lb 352 344 -8 COPPER commodity market outlook LME COPPER USD/mt 7725 7520 -205 was not optimistic. During COMEX GOLD USD/oz 1615 1575.70 -39.3 this week, the agricultural market remained strong while the chemical, construction materials, steel, metal and coal markets took downward trends. China macro-economic data was mixed. PPI slips and negative import data in China worried market players. SCI estimates that the commodity market in China still faced downward pressures on the back of soft demand and regulations at the real estate market. Petrochemical Market Table 10: Biggest Movers This Week, Yuan/mt Change Change Product Prior Week Current Week (price) (percent) Acrylonitrile 12000 13200 +1200 +10.00 Butadiene 2310 2500 +190 +8.23 Phthalic Anhydride 9750 10550 +800 +8.21 Crude Benzene 5550 5950 +400 +7.21 O-Xylene 9200 9800 +600 +6.52 LLDPE 3920 3780 -140 -3.57 Methanol 2840 2745 -95 -3.35 Nickel 122250 118700 -3550 -2.90 MDI 22100 21500 -600 -2.71 Gold 331.2 323.3 -7.9 -2.39 RESEARCH REPORT Monomers Ethylene: Asian ethylene Table 11: Asian Monomer Prices, USD/mt sustained rising due to tight Change supplies caused by shutdown at Product Jul 11 Jul 4 (price) some plants. The market will Ethylene 1051.5 1021.5 +30 correct upwards in the short term. Propylene 1300.5 1264.5 +36 Propylene: The market maintained the uptrend this week. Butadiene 2500 2310 +190 Prices in Shandong edged higher Naphtha 835.41 808.35 +27.06 while those in other regions stabilized. Given the limited favorable elements, the market will remain stable recently. Butadiene: Some butadiene units will shut down for overhaul later in China, so buyers showed more activity for purchasing Aug shiploads, resulting in the short supply in Asian market and rising spot goods prices. However, the fierce appreciation may trigger downstream players’ resistance. The butadiene market will correct on the high side for a short time. Naphtha: Global oil prices on the whole stabilized this week. Nevertheless, as cracking plants lifted their operating rates, demand for naphtha seemed fine and naphtha prices fluctuated upward in Asian market. Improved profits at producers should be responsible for rises in the market. However, for European debt crisis will remain uncertain, dealers still make operations with caution. General Plastics PE: Producers tended to reduce Table12: Domestic General Plastic Prices, Yuan/mt offers slightly considering Change sluggish demand and inert Product Grade Jul 5 Jul 12 (price) trading. The coming market still PE 7042 10300 10200 -100 faces downward risks. PP: PP T30S 11250 11150 -100 Partial producers reduced offers PVC SG5 6470 6370 -100 in light of weak demand caused by previous sharp growth in PS 5250 11300 11500 +200 EXW prices. The subsequent ABS 0215A 15500 15300 -200 market is expected to undergo downward adjustments. PVC: Market demand was subdued by continuous regulation in the housing market. Thus, the market will be unlikely to get rid of the current predicament. PS: Considering sluggish feedstock and weak downstream demand, traders chose to take profits off the table. The market will likely to inch lower in the short run. ABS: As fluctuations in the external environment dampened bullish anticipation in the market, partial holders hurried to take profits, resulting in contracting dealing prices. The coming market will maintain the current trend. Engineering Plastics Table 13: Domestic Engineering Plastic Prices, Yuan/mt RESEARCH REPORT PC: Market prices moved Change Product Grade Jul 5 Jul 12 sideways. Middlemen (price) replenished inventories PA6 MV Chip 21500 21500 0 properly, leading to adding PA66 EPR7 23400 23000 -400 deals. The market will edge PC 2805 20000 19800 -200 down next week. PA6: PBT GX-121 13800 14000 +200 Mounting momentum fell POM M90 10000 9900 -100 dampened by sluggish PMMA CM205 18000 17800 -200 demand coupled with poor feedstock prices. The market will fall marginally in the near run. PA66: Market prices were characterized as fluctuating downward on poor demand. In the absence of positive inspirations, the market is projected to remain weak. PBT: Face cost increases, producers had to pull up EXW offers, while it met resistance from buyers. In general, the market may edge up. PMMA: Producers only cut production within a limited range, which supported the market little. The market may drift lower in later days. POM: EXW quotations stayed flat. Traders sold goods actively, while trading was thin. Along with overhauls in later days, the market is expected to experience weak corrections. Renewable Plastics PE: Market prices were typically stable. Regional film material prices climbed tentatively supported by limited goods, while offers of granule primarily sustained corrections curbed by weak demand. Costs will prevent the market from declining further, while trading will show no noticeable improvement. PP: Downstream users kept the need-to purchasing mode and traders operated depending on market movements amid average feedstock supplies. PET: The market maintained the current trend. Mainstream dealing prices edged up in North China. In East China, following the external conditions and weak demand, partial participants carried out negotiable room in transaction prices, while most traders were reluctant to sell at low prices due to low inventory pressure. EPS: The market witnessed a weak trend this week. Partial market prices inched down as supplies of lump materials eased and demand remained weak. Wait-and-see sentiment was thick in the market. PVC: In view of high stocks and sluggish downstream demand, producers made certain discounts in transaction prices, resulting in the increases in low-priced goods. ABS：Producers met sales resistance and traders also showed muted operating indications. Partial downstream users bargained while producers dug their heels at the discounts. Table 14: Domestic Renewable Plastic Prices, Yuan/mt Product Grade Jul 5 Jul 12 Change (price) A level PE pure EVA PE 7750 7900 +150 granules chemical fiber, white clear PET 7100 7100 0 sheet A level BOPP white PP 8100 8050 -50 granules RESEARCH REPORT EPS A level transparent EPS 8300 8300 0 granules common A level white PVC 6500 6500 0 transparent soft granules Titanium ABS A level ABS 10300 10300 0 granules Rubber NR: China’s unfavorable Table 15: Domestic Rubber Prices, Yuan/mt economic data triggered insider Change worries, under which conditions, Product Grade Jul 5 Jul 12 (price) SHFE prices adjusted and the GB 1 24300 24300 0 spot market was weighed on by NR Futures thin demand. It is difficult for 24165 23880 -285 1209 unfavorable elements to SBR 1502 21200 21000 -200 disappear in a short time and the BR 9000# 23200 23100 -100 NR market will keep adjusting. SBS T171 18800 19000 +200 Synthetic Rubber: Sales companies continued bringing up SBR prices this week, but market quotations inched down and traders showed more intentions for selling. The SBR market will correct rationally recently. The prevailing BR EXW prices remained stable and partial sales companies lifted prices. However, the previous lucrative goods emerged in the market, so traders were eager to sell goods and prices edged lower. SBS: The market continued advancing. The grease SBS market fell after a price hike while high prices of dry SBS and road modified asphalt dampened buy sentiment. Traders showed stronger intentions for selling and transactions were moderate. Grease SBS quotations will get rational in a short time while the dry SBS and road modified asphalt markets will keep at highs. Aromatics Benzene: Rising oil prices and Table 16: Domestic Aromatics Prices, Yuan/mt climbing international benzene prices Product Jul 5 Jul 12 Change (price) as well as short supply pushed up Benzene 7600 8000 +400 benzene prices and bullish sentiment Toluene 8300 8275 -25 seemed thick. The benzene market Xylene 8500 8475 -25 will remain on the high side next Styrene 10100 10050 -50 week. Toluene: Buying sentiment was sluggish and transactions were stalemated. The toluene market will fluctuate within a narrow range next week. Xylene: Resources were centralized in some areas and commodity holder firmed their quotations. However, buying was thin and the xylene market will be range-bound next week. Styrene: The market corrected this week and players should pay attention to oil prices and external environment next week. RESEARCH REPORT Intermediates and Chemical Fiber Raw Materials PTA: Macro-economy Table 17: Domestic Intermediate and Chemical Fiber Raw offered no guidance for the Materials Prices, Yuan/mt, USD/mt time being and no practical Change Product Jul 5 Jul 12 improvement happened in (price) downstream demand. The PX (CFR PTA spot market fluctuated 1329 1353 +24 Taiwan) and it will correct on the PTA 7500 7400 -100 downward trend next week. CPL 18500 18200 -300 CPL: Macro-economy AN 12000 13200 +1200 frequently fluctuated and Semi-dull PET market insiders lacked 9150 9100 -50 Chip confidence, also no favorable elements from fundamentals existed. The CPL market will undergo a short-term downward correction. AN: Spot goods supply tightened and traders held limited commodities in hands. Buyers had more confidence, which supported the AN market to operate at highs. The AN market will adjust next week. PET Chip: Owing to unstable feedstock prices, buyers didn’t purchase intensively. The PET chip market is likely to correct on the downward trend for a short time. Phenols, Ketones and Downstream Products Phenol: Importers Table 18: Domestic Phenols, Ketones and Downstream Products offered firm prices and Prices, Yuan/mt PCs pushed prices up. Product Jul 5 Jul 12 Change (price) As a result, end-users Phenol 10250 10550 +300 began showing Acetone 7450 7450 0 resistance. The phenol ECH 10800 11300 +500 market will fluctuate Bisphenol A 12700 12600 -100 next week. Acetone: Epoxy Resin (E-51) 18000 18400 +400 The market adjusted and transactions seemed stalemated. The acetone market will continue fluctuating next week. BPA: Fundamentals softened but insiders refused to sell goods at low prices in view of the stiffening feedstock prices and high USD offers. The BPA market will fluctuate on the high side next week. ECH: Under the cost pressure, plants didn’t sell goods at low prices while downstream players showed resistance in purchasing high-priced goods. The above conditions will sustain next week. Epoxy Resin: Owing to short cost support and sluggish demand, the resin market lacked driving forces to advance. The market will fluctuate at highs next week. Acids and Esters Table 19: Domestic Acids and Esters Prices, Yuan/mt Product Jul 5 Jul 12 Change (price) RESEARCH REPORT Glacial Acetic Acid: Glacial Acetic Acid 2875 2875 0 The market remained at Ethyl Acetate 5900 5975 +75 a dilemma. Ethyl Butyl Acetate 8350 8450 +100 Acetate: The market Acrylic Acid 10000 10200 +200 prices continued edging Butyl Acrylate 12000 12200 +200 higher, but traders became cautious as downstream demand lowered. Butyl Acetate: The market kept climbing pushed by the upbeat feedstock market, but sentiment became poor by the weekend. Acrylic Acid: The market stabilized gradually, and transactions turned bleak. Butyl Acrylate: The growth slowed down and downstream demand was poor. Hence transactions receded noticeably. Chemical Fibers Polyester Staple Fiber: The market drifted downward due to the weak feedstock market and will remain poor next week. Polyester Filament Yarn: The upstream market underwent weak correction, along with the bleak demand fundamental, the market will remain feeble. PA6 Chip: The market is expected to experience narrow correction as CPL prices remained under adjustment and demand was poor. Acrylic Staple Fiber: although posted prices mounted up, bolstering buyer sentiment, demand was still weak, thus market will remain in correction. Spandex: Market prices were underpinned by high cost and reduced output even though demand was poor, and the market is predicted to be stable next week. Viscose Staple Fiber: No pressures were seen in sales and production; plants held prices firmly, market will undergo narrow-ranged fluctuation. Table 20: Domestic Chemical Fibers Prices Yuan/mt Change Product Jul 5 Jul 12 (price) Polyester Staple Fiber(1.4D*38mm) 9900 9825 -75 Polyester Filament Yarn (POY150D/48F) 10000 10050 +50 PA6 Chip(High Speed Spinning) 20400 20400 0 Acrylic Staple Fiber(1.5D*38mm) 15200 15550 +350 Spandex(40D) 43700 43700 0 Viscose Staple Fiber(1.5D) 14700 14850 +150 Chemical Additives Table 21: Domestic Chemical Additive Prices, Yuan/mt Product Jul 5 Jul 12 Change (price) Pathalic Anhydride 9750 10550 +800 DOP 11650 11900 +250 Zinc Oxide 14800 14800 0 Carbon Black 5600 5600 0 RESEARCH REPORT Pathalic Anhydride: Sulphur 1524.58 1521.71 -2.87 Producers limited sales volumes due to tight resources and prices soared. DOP: Traders had stronger intentions of selling goods amid mediocre negotiation sentiment. Prices are predicted to slip. Carbon Black: Coal tar prices gained slightly, increasing carbon black cost. Sales at most manufacturers warmed and prices will stabilize in the near term. Zinc Oxide: Zinc prices shocked narrowly and zinc oxide quotations remained stable. Plants produced according to orders and downstream users made purchases on a need-to basis. The future market will remain light. Sulfur: The market maintained flat. Sinopec raised prices to stabilize market confidence. Low prices at ports are going steady and the third-quarter contract prices have not been released. The sulfur market may be largely sidelined in the short term. Organic Alcohols Methanol: Influenced by Table 22: Domestic Organic Alcohol Prices, Yuan/mt the rainy weather, Change downstream demand Product Jul 5 Jul 12 (price) shrank and methanol Methanol 2840 2745 -95 prices at ports slipped. Ethylene Glycol 6750 6750 0 The market is still under Diethylene Glycol 6450 6480 +30 downward risk in the near N-Butanol 9900 10000 +100 term. MEG: The macro 2-Ethyl Hexanol 11700 12000 +300 had no obvious favorable news and demand didn’t improve. The market is expected to fluctuate narrowly in the future. DEG: Surrounding environments were unsteady and rigid demand was not sufficient. Sellers kept offers firm due to high cost. The market will be range-bound next week. NBA: Market transactions weakened and mainstream negotiation prices dropped back from high level. Prices may be steady-to-slipping next week. 2-EH: The uptrend softened and the market is stabilizing. The plasticizer market is largely bearish next week and 2-EH prices may follow to decrease reasonably. Polyurethane Raw Materials Table 23: Domestic Polyurethane Raw Materials Prices, Yuan/mt Product Jul 5 Jul 12 Change (price) TDI 21200 21000 -200 Polymeric MDI 17450 17300 -150 Pure MDI 22100 21500 -600 Propylene Oxide 11000 11200 +200 Polyether Polyol 11600 11800 +200 RESEARCH REPORT TDI: Resources were Adipic Acid 9650 9900 +250 abundant and the Butanone 8150 8200 +50 downstream market BDO 14200 14450 +250 remained sluggish. It is anticipated that the TDI market will continue slipping. Polymeric MDI: Most traders are bearish on the future market because of weak demand. Prices are predicted to move downwards next week. Adipic Acid: The reluctance sentiment in the spot sales was thicker and prices rose for small deals, however, transactions were poor due to dismal downstream demand. The market will run at lows next week. Butanone: Support from crude prices has disappeared and demand was insufficient. The market is predicted to be stalemated next week lacking rebound powers. Propylene Oxide: Downstream demand increased accidently and propylene prices rose. The PO market went upward, but high prices will be under pressures next week. Pure MDI: With increasing supply, the spot market continued softening. Prices are expected to drop further next week. Polyether Polyol: Upstream PO prices remained at high level, while downstream demand was light. The market will be largely in consolidation next week. BDO: Actual transaction prices were drove up in the week of joint price up-adjustment by producers. Speculation in the spot market is obvious, but the rebound space may be limited. Coal Chemical Products Crude Benzene: Table 24: Domestic Coal Chemical Products Prices, Yuan/mt Inspired by rising Product Jul 5 Jul 12 Change (price) petrobenzene prices and Crude Benzene 5550 5950 +400 active downstream Coal Tar 2375 2425 +50 purchasing, the market Coal Tar Pitch 2570 2550 -20 jumped. Resources are tight and prices still have Crude 4800 4800 0 upward space. Coal Tar: Naphthalene Prices rose slightly. Coking Benzene 7050 7500 +450 Downstream users Maleic Anhydride 9900 10300 +400 purchased modestly with resistances to high prices. Low-end prices will rise in the future. Coal Tar Pitch: The market shocked narrowly. Coal tar prices advanced tentatively and downstream demand was flat, thus the market may stabilize gradually. Industrial Naphthalene: Downstream demand was sluggish and middlemen purchased cautiously. Sales were light and most traders were bearish on the future market. Coking Benzene: As resources were tight; production cost stayed high and benzene prices are expected to rise, the coking benzene market will continue rising in the future. Maleic Anhydride: Cost support was strong and resources were tight due to high overhaul rates. The following market is predicted to move up slowly. Inorganic Acids Table 25: Domestic Inorganic Acids Prices, Yuan/mt Product Jul 5 Jul 12 Change (price) RESEARCH REPORT Sulfuric Acid: The market Sulfuric Acid 425 425 0 corrected at lows with bleak Nitric Acid 1630 1650 +20 trading; sulfur prices were low and demand was soft. The acid market will maintain weak consolidation next week. Nitric Acid: Prices rose slightly and transactions were sparse. Aniline prices increased, while the output was limited. The inventory of acid enterprises is high and nitric acid prices may drop marginally next week. Metal Market Product Term Unit Jul 12 Weekly Change (price) Futures Yuan/mt 55150 -830 Copper Spot Yuan/mt 55440 -810 Futures Yuan/mt 15470 -210 Aluminum Spot Yuan/mt 15550 -200 Futures Yuan/mt 14645 -205 Zinc Spot Yuan/mt 14500 -250 Futures USD/oz 324.7 -9.1 Gold Spot USD/oz 323.3 -7.9 Thread Futures Yuan/mt 3919 -175 Steel Spot Yuan/mt 3810 -70 Futures Yuan/mt 3934 -168 Wire Rod Spot Yuan/mt 3780 -140 Lead Spot Yuan/mt 14925 +25 Tin Spot Yuan/mt 148250 -250 Nickel Spot Yuan/mt 118700 -3550 Units: Yuan/mt Non-ferrous Metals The non-ferrous metals market fluctuated downward this week. As one kind of risk assets, metal quotations are easily to be affected by the economic fundamentals. On the one hand, US economic growth slowed and the Fed minutes delivered no indications to carry out QE3, which weighed on the metal market. On the other hand, the Federal Constitutional Court of Germany put off the decision date for European Stability Mechanism (ESM) and the latest European Fiscal Compact, which further impacted the European debt crisis. Thirdly, market insiders mostly predict that the upcoming second-quarter economic data will be terrible, which aggravated the panic sentiment among the metal market. Staying in off season, the metal market may continuously be soft in the near future. RESEARCH REPORT Ferrous Metals Steel prices continued the downtrend this week. Hot-rolled steel prices declined by Yuan 100/mt and construction steel offers dipped by Yuan 140-180/mt. CPI hit a 22-month low early this week. In addition, the European debt crisis was volatile and the Spain treasury bonds yield further soared. Furthermore, both the metal futures and stock market were sluggish. Traders were pessimistic and low-priced goods successively emerged in the market. In view of high crude steel yield and sluggish demand, steel prices will probably further decrease. Copper The LME copper market remained adjusted within a narrow range this week with prices fluctuating around $7,500/mt. US economic data was unsatisfactory and the falling inflation in China confirmed the slowed economic growth. Moreover, CPI in China hit the record low. Lacking concrete directions, LME copper prices will remain adjusted around $7,500/mt in the short run and market participant need to pay attention to economic data of China and US. Aluminum The LME aluminum market remained adjusted this week with LME aluminum prices at $1,890-1,933/mt. The domestic falling inflation in June and sluggish import & export datas triggered worrisome sentiment in the metal market, but also promised more space for China government to relax mometary policies. Before the publication of China economic data during the weekend and Fed minutes, market participants will bear cautious attitudes. Aluminum prices in SHFE stayed at Yuan 15,500/mt and spot aluminum offers hovered in line with those in SHFE. Though traders actively sold goods at discounts, downstream users were unwilling to pick up goods, thus transactions were mostly rigid demand. In the short run, aluminum quotations will be weak. LME aluminum prices may fluctuate around $1,900/mt while aluminum offers in SHFE will probably remain adjusted around Yuan 15,500/mt. Zinc LME zinc prices remained adjusted this week with market trend stable. The macro-economic fundamental was wrapped with both bearish and bullish elements. US non-farm payrolls data was lower than expected and China inflation pressure eased in June. Afterwards, the sluggish import & export data weighed on the market sentiment, thus investors consecutively quitted the market and remained wait-and-see. China will publish the second-quarter GDP data tomorrow, and zinc transactions will be operated cautiously before its publication. Zinc prices in SHFE will fluctuate within a narrow range and low-end offer may dip to some extent. Spot zinc sales will underwent no large changes in the coming market. RESEARCH REPORT Construction Steel The construction steel quotations in China kept dipping this week on the whole. Third-grade deformed bar (16-25mm) prices in Beijing were cited at Yuan 4,030/mt on Thursday, down by Yuan 70/mt from last week. Hebei Iron & Steel Group maintained guidance prices unchanged for its construction steel while Shagang Group decreased Yuan 70/mt for its deformed bar and wire rod guidance prices, Yuan 100/mt for its valve snail guidance prices respectively. Other steel plants mostly regulated down quotations. Construction steel transactions in South China were restricted by sweltering summer heat and those in North China were restricted by rainy weather. The construction steel market was enveloped in bearish sentiment triggered by high supply, sluggish demand and bad weather. In conclusion, the construction steel market will continue struggling in high yield, high stock level, dull demand and low offers, as a result, it is likely to remain adjusted at the bottom from July to August. During this period, though the construction steel market may slightly rebound due to transiently favorable economy, this won’t last long. Expected by SCI, construction steel prices will kept dipping next week. Coal Market Product Jul 12 Weekly Change Shanxi high-quality mixed coal, 5,500kcal/kg 650 -15 Shanxi mixed coal, 5,000kcal/kg 550 -10 Zaozhuang 1/3 Coking Coal 1220 0 Hebei Prime Coking Coal, Grade 10 1539.72 0 Jincheng Washed Anthracite, Middle Lump 1180 0 Yongcheng Washed Anthracite, Middle Lump 1500 0 Units: Yuan/mt Steam Coal The whole steam coal market remained weak. After lowering the inventory by cutting back or creasing coal production, coal sales at some coal mines in Inner Mongolia tended to be stable. In southern China, it is in the period of continuously hot weather, yet the demand for electric coal did not improve significantly. In addition, hydroelectric power supply went on smoothly. So the inventory of steam coal at power stations remained at a relatively high level. In the Bohai-Rim area, the average closing price of steam coal (Calorie 5500) was concluded at Yuan 652/mt, decreasing by Yuan 24/mt from the previous week. Reference steam coal prices at Qinhuangdao Port continued to move lower, which were weaker by Yuan 25-35/mt this week. Weakness was seen in steam coal prices for spots at ports in southern China. At present, it is hard for the inventory at power stations to plunge sharply in a short time though midsummer is coming. Therefore, steam coal prices might weaken in the future. Steam coal prices at ports will be on a RESEARCH REPORT downtrend, yet the losses of prices might lessen in the future. Coking Coal When it turned July, coking coal prices were on a continuously decreased trend. Coking coal prices in East China and North China plummeted again this week due to sluggish demand from the downstream market. Large-sized coal mines in Linyi also reduced coal prices by Yuan 70/mt this week, following the drop in coking coal prices from large coal mines located in Yanzhou last week. Gas coal prices at large-sized coal mines in Taian fell by Yuan 70/mt with coking coal prices in other regions staying flat. In July, dealing prices of coking coal at Shanxi Coking Coal Group Co., Ltd. also dwindled to a certain degree and prices for a few kinds of coals were weaker by Yuan 50-100/mt. In northwest China, coking coal prices stayed at lows this week. Coking coal prices at major coal companies in northeast China lessened due to weak demand; coking coal prices at Heilongjiang Longmay Mining Holding Group Co., Ltd. fell by Yuan 30-40/mt this week. Downstream steel plants in southern China cut back steel production and took measures to lower production costs, which exerted much pressure on coking coal trades at coal companies in southern China. At a later time the coking coal market will be awash with bearish sentiment and the sluggishness of the coking coal market will be ongoing in the short run. Anthracite This week the anthracite market was calm overall. Slack coal prices at some areas dropped slightly and device operations at coal mines kept decreasing. Shanxi Asian American-Daning Energy Co., Ltd. reduced slack coal prices (Q5700) by 40/mt to Yuan 730/mt (FOR with tax, excluding service charge of Yuan 22/mt) and Yuan 670/mt (FOT with tax). In addition, the producer planned to overhaul the devices in the second half of July. In order to keep coal prices stable, restriction of coal production was seen in anthracite coal producers in Shanxi and Henan; the trading volume of anthracite slid continuously with market players taking thick wait-and-see stances. Subdued by the waned electric coal prices, in the future anthracite prices might on the downward tendency while slump coal prices are much likely to become stable.
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