Weekly Report of Bulk Commodity Market in China ENGLISH by liaoqinmei

VIEWS: 4 PAGES: 15

									                                     Weekly Focus

   This week economic data of major economies remained mixed. US factory orders
    unexpectedly picked up in December 2010, a sign of strong growth in American
    manufacturing. Driven by accelerating employment growth, US non-manufacturing PMI in
    January rose to 59.4 from December 2010’s 57.1. In January, American nonfarm payrolls
    increased by 36,000 jobs, lower than expected, while unemployment rate sank to 9.0%, the
    lowest level since April 2009. Sentix investor confidence index in euro area rose to 16.7 in
    February from January’s 10.6, hitting the highest level since September 2007. Germany
    industrial orders fell by 3.4% m-o-m and industrial production decreased by 1.5% after
    seasonally adjustment, both lower than forecasts. About relevant policies, the People’s Bank
    of China announced to raise RMB benchmark deposit and lending rates of financial
    institutions, effective on Feb 9, 2011; both one-year benchmark deposit and lending rates rose
    by 0.25% respectively, and other benchmark deposit and lending rates were also adjusted
    accordingly.

   Brent crude extended premium over WTI to the historical highest level of $15/bbl, largely
    due to fundamental imbalance between Europe and the US. The unrest in Egypt and frequent
    accidents in the North Sea oil field triggered worries about oil supply from both regions,
    resulting in rising Brent prices. Brent/WTI premium will not change much due to high
    inventory level in Cushing.

   This week performances of global commodity markets were mixed. Crude oil prices kept
    dropping while copper and gold prices firmed. Because outlook for growth in developed
    economies improved and price spikes of food and energy began to spread to other goods and
    services, expectations on interest rate hikes strengthened worldwide. In domestic market,
    compensatory growth became the mainstream after the Spring Festival holiday.
                                      Energy Market

Crude Oil

Oil Analysis
Brent crude extended premium to WTI to the historical highest level of $15/bbl, largely due to
fundamental imbalance between Europe and the US. The unrest in Egypt and frequent accidents in
the North Sea oil spurred worries about oil supply from both regions, continuing to drive up Brent
prices, while in the US weak spot demand for crude oil and high inventories, especially in Cushing,
depressed oil prices in New York. Data from EIA shows, as of the week ended January 28, crude
inventories in Cushing was 38.30 million barrels, the highest record since EIA began to record
inventories in Cushing in April,
2004. On the other hand, interest           Figure 1: Crude Oil Price Movement, USD/bbl
rate hikes in China could be a
signal of control on an overheating
economy, which may restrain
growth of oil demand. EIA
published Short-Term Energy
Outlook, Feb 2011 in which EIA
lowered forecast of global oil
demand this year by 10,000 barrels,
and also decreased forecast of oil
prices. EIA expects the price of
WTI crude oil to average $93.26
per barrel, down $0.16 from the
previous forecast.

               Table 1: WTI and Brent Prices for Week Ended Feb 10, USD/bbl
                                   Weekly Averages                    Monthly Averages
  Product     Feb 9      Current        Prior
                                                   Markup        MTD          Dec      Markup
                          Week          Week
   WTI         86.71      87.04         91.27        -4.23        88.9       89.67       -0.77
   Brent      101.82      100.33       101.73        -1.4       100.95       96.91       4.04


Outlook
In the US, crude oil in warehouse is unlikely to be transported effectively before the new oil
pipeline is completed, while the contango in futures market propels refineries to more crude
inventories. Brent/WTI premium will not change much in the near term. Meanwhile, speculators
took advantage of accidents to push up oil prices. Next week crude oil prices will stay high.
Refined Oil

After the Spring Festival holiday,
                                              Table 2: Natural Gas Futures Prices for Week
refined oil demand in domestic market
                                                       Ended Feb 10, USD/mmBtu
didn’t     improve     markedly       and
                                                                        Weekly Averages
transactions were thin. However,
                                            Product Feb 9 Current              Prior
European crude oil stayed around                                                        Markup
                                                                  Week        Week
$100/mt, continuing to support
                                            Nat. Gas     4.04      4.04        4.41       -0.37
anticipation of a price adjustment. At
present, change of weighted moving
                                            Table 3: LNG Closing Prices in E-China, RMB/mt
average of three market prices has
                                                 Product          Feb 9      Jan 27     Markup
reached 10%. The central bank raised
                                             Domestic-made        6,105       6,180        -75
interest rates on February 9 and CPI due
to be released on February 15 may               Imported          6,900       7,200       -300
exceed 5%. Both imply that Chinese economy is not optimistic. So price adjustment of refined oil
may be cautious and the growth will be limited. However, local refineries in Shandong province
raised prices of gasoline and diesel after the holiday, indicating strong anticipation of a price
adjustment among market players. But in recent transactions did not improved markedly because
players preferred to stay on the sidelines. On the whole, a price adjustment is inevitable and
market players are waiting for its release.
                 Table 4: Domestic Refined Oil Spot Market Prices, RMB/mt
                                 Sinopec&PetroChina               Other Refineries(Shandong)
        Product
                              Feb 10       Weekly Markup          Feb 10       Weekly Markup
   Gasoline GBⅡ93#             7,730               0               7,700             +200
     Diesel GBⅡ0#              8,050              -30              7,850             +150

Fuel Oil

Asian fuel oil market performed well. Singapore              Table 5: Fuel Oil Prices, RMB/mt
180cst fuel oil prices reached $600/mt and price                      Feb 10    Jan 27 Markup
spread between February and March 180cst fuel oil
                                                            Spot      4,550      4,550        0
paper goods soared to a record of $14/mt. In
                                                          Futures     4,801      4,689      +112
domestic market, importers had to stay on the
sidelines due to high cost, while refineries purchased much cheaper domestic products. But the
uptrend in fuel oil prices is likely to continue driven by cost. In domestic heavy oil market, after
the holiday, upstream and downstream players were cautious and the market was basically stable.
Heavy oil market will go up slowly supported by rising diesel market and high cost of imported
material.
                                     Financial Brief

Finance

During the Spring Festival holiday, most economic data released were promising, driving up stock
markets in Europe and the US.                    Table 6: Major Global Stock Indexes
In the first week after the
                                   Stock Index           Jan 26          Feb 9         Markup
holiday,    domestic     stock
                                        SCI             2,708.81        2,774.06        +65.25
markets inched up following
                                       DOW             11,985.44       12,233.15        +247.71
rising international stock
                                    NASDAQ              2,739.50        2,797.05        +57.55
markets. In the US, growth of
                                    FTSE 100            5,969.21        6,091.33        +122.12
employment in January was
                                     NIKKEI            10,401.90       10,617.83        +215.93
limited while unemployment
rate decreased to the lowest level since April 2009, indicating that American employment market
is improving gradually. The US Department of Labor announced on Wednesday that in January
nonfarm employment rose by 36,000 jobs and private-sector employment increased by 50,000
jobs. Nonfarm employment in December 2010 revised up to 121,000 jobs from the previous
103,000 jobs. Moreover, because most listed companies reported better-than-expected earnings for
the fourth quarter of 2010, Dow Jones Index closed at 12239.89 point, a new high in thirty months,
up 6.74 point or 0.06%, capping its longest winning streak since March 2010. People’s Bank of
China announced on Tuesday evening to raise benchmark deposit and lending rates by 0.25%,
effective on Wednesday. It’s the first interest rate hike in 2011 and depressed growth in domestic
stock markets to some extent. In the near future, domestic stock markets will remain weaker than
international ones.

Currency Market

This week USDX showed an inverse V-shaped trend. Last Thursday dollar rose sharply against
euro as economic data in the US were strong while those in euro area were weak, although US
employment data released later were mixed. In the US, growth of nonfarm employment in January
is far below forecast while unemployment rate sank to the lowest level in two years, implying an
improving American employment market. It also indicates less possibility of further relaxation of
monetary policy. USDX                   Table 7: Major Currencies Exchange Rates
inched up accordingly.          Exchange Rate        Jan 26           Feb 9           Markup
However, entering this              USDX             77.743          77.660            -0.083
week,      USDX       kept
                                  USD/RMB            6.5878          6.5849           -0.0029
declining. Along with
                                  USD/JPY             82.18           82.42            +0.24
rising European and US
                                  EUR/USD            1.3706          1.3716           +0.0010
stock markets, market
                                  GBP/USD            1.5918          1.6097           +0.0179
risk appetite improved,
Fed officials delivered optimistic comments, and safe haven investment demand fell. The above
factors put dollar under pressure. Federal Reserve Chairman Bernanke was cautious about
American economy in his congressional testimony. He warned that the Federal Reserve would
consider quitting the 600 billion QE2 only when more optimistic economic data emerged, which
also depressed dollar. Since the anticipation of global inflation is still strong, USDX may remain
weak in the near term.



Futures Market

  This week performances of global commodity Table 8: Main Domestic Commodity Future
markets were mixed. International crude oil             Contracts Closing Prices, RMB/mt, RMB/g
kept falling by near 6%, while LME copper
                                                        Contract      Jan 27      Feb 10    Markup
once reached a historical high of $10,160/mt.
                                                          L1105        11,670     12,370      +700
And gold prices were high amid strong
                                                          V1105        8,155       8,525      +370
anticipation of global inflation and geopolitics.
                                                         TA1105        11,640     12,194      +554
Interest rate hike may be a key factor to
                                                         Fu1103        4,689       4,801      +112
influence commodity markets this year.
                                                         Ru1105       40,550      42,765     +2215
Analysis shows anticipation of interest rate
                                                        Cu11103       71,700      75,880     +4180
hikes is strengthening worldwide as outlook for
                                                         Al1102       16,785      17,050      +265
growth of developed economies is improving
and price increases in food and energy began to          Zn1103       18,255      19,585     +1330
spread to other goods and services. Entering             Au1106       290.41       292.7     +2.29
2011,          inflationary         Table 9: Main Foreign Commodity Futures Contract
pressures triggered a                                       Closing Prices
round of interest rate              Contract               Unit       Jan 26      Feb 9     Markup
hikes among emerging             TOCOM NR                 JPY/kg       457.2      505.5      +48.3
economies. And now the COMEX COPPER                       USC/lb       426.7      452.4      +25.7
trend is spreading to           LME COPPER               USD/mt        9,370      9,925       +555
developed       economies.      COMEX GOLD                USD/oz       1,333     1,365.5     +32.5
Because of the improved
outlook of American economic growth and the risk that price hikes in food and energy may extend
to other goods and services, long-term interest rates in bond market has picked up and anticipation
of interest rate rise from the Federal Reserve is strengthening. Although European Central Bank
(ECB) is cautious to raise interest rate, inflation rate in euro area has climbed beyond target level.
ECB also said current inflation was driven by rising prices of raw materials, and if inflation didn’t
drop, ECB would have to raise interest rates. In domestic market, compensatory growth became
the mainstream after the Spring Festival holiday.


                                Petrochemicals Market

                               Table 10: Biggest Movers This Week
                                                      Current          Markup           Markup
     Product            Unit       Prior Week
                                                       Week            (price)          (percent)
       ↑Tin          RMB/mt          164,900          186,500          +21,600           +13.10
     ↑Nickel         RMB/mt          195,500          217,000          +21,500            +11.00
↑Nature Rubber       RMB/mt          40,100            42,700           +2,600            +6.48
      ↑PTA           RMB/mt          11,100            11,700            +600             +5.41
     ↑Copper         RMB/mt          71,075           74,050           +2,975           +4.19
      ↓Lead          RMB/mt          17,500           17,150            -350             -2.00
      ↓Gold           USD/oz         295.3            290.2             -5.1             -1.73
      ↓LPG           RMB/mt          6,180            6,105              -75             -1.21
    ↓Gasoline        RMB/mt          8,080            8,050              -30             -0.37
       ↓PX           USD/mt          1,643            1,640              -3              -0.18



Monomers

Ethylene: Asian crack units will
                                                Table 11: Asian Monomer Prices, USD/mt
enter turnaround season, so the
                                                                           Markup Markup
market will rise with fluctuations.        Product       Feb 9   Jan 26
                                                                            (price)   (percent)
Propylene: The market improved
                                           Ethylene      1,310    1,265       45       3.56%
slowly amid gradual recovery of
                                          Propylene     1,354.5 1,307.5       47       3.59%
demand and high international
market. Since favorable factors           Butadiene      2,234    2,195       39       1.78%
were mild, the market rose at a slow       Naphtha      885.14    867.6      17.54     2.02%
pace and only in some regions. The trend will continue in the near term. Butadiene: Transactions
were limited due to holiday. Asian market inched down. After the holiday, supply is likely to
tighten as downstream SR market keeps rising and some butadiene units will be shut for
maintenance. Players are optimistic. Asian market will rise with fluctuations. Naphtha: WTI
declined for five successive days, and Brent/WTI premium reached $15/bbl. International naphtha
crack spread versus Brent crude futures inched down to $120/mt because of absence of clear
market direction on the back of light trading.

General Plastics

PE: After the holiday,
                                       Table12: Domestic General Plastic Prices, RMB/mt
buying interest was mild.
                                                                               Markup Markup
But the market is likely to Product Grade                Feb 10     Jan 27
                                                                                (price) (percent)
go     up     supported     by
                                   PE        7042        11,050     11,100        -50      -0.45%
quotations from PCs and
                                    PP       T30S        12,100     12,050        50       0.41%
that production will resume
                                  PVC        SG5          7,850      7,800        50       0.64%
gradually. PP: Downstream
                                    PS       5250        11,800     11,800         0       0.00%
factories still didn’t resume
                                  ABS       0215A        18,350     18,300        50       0.27%
production, resulting in light
trading. Market players stayed on the sideline. The market adjusted slightly. PVC: The market
wasn’t active and transactions were thin. Supply was ample while demand resumed slowly, which
couldn’t boost prices. PS: The market was mild and transactions were thin. The market will go up
driven by tight supply and cost. ABS: Most downstream plants remained closed and the market
resumed slowly. In the short term, the market is likely to pick up due to supply shortage and rising
cost.
Engineering Plastics

PC: After the holiday, most market players stayed on the sideline. Some players didn’t come back
to the market. Market trend was unclear. Because of international market and rising cost, the
market will be stable-to-high. PA6: Both international and domestic CPL markets rose. After the
holiday, PA6 went up.
                                  Table 13: Domestic Engineering Plastic Prices, RMB/mt
Fewer downstream
                                                                          Markup        Markup
players came back to       Product       Grade        Feb 10      Jan 27
                                                                           (price)     (percent)
the market. Next
                             PA6        MV Chip       28,500       27,700    800        2.89%
week market trend
                             PA66        EPR27        32,000       31,800    200        0.63%
will be clear. PA66:
                              PC          2805        26,800       26,800     0         0.00%
The market firmed
                             PBT       1100-211M      19,200       19,200     0         0.00%
amid strong PA6
                             POM          M90         14,500       14,500     0         0.00%
market. Fewer buyers
                            PMMA         CM205        23,900       23,900     0         0.00%
and suppliers came
back to the market. Supply and demand were normal. Next week the market will be stable. PBT:
Cost kept rising after the holiday. PBT market will continue to climb. PMMA: Demand still didn’t
resume. In the short term, the market will adjust at a high level. POM: Most players were on the
sidelines. Suppliers were reluctant to offer. The market as a whole was mild, and will adjust
slightly later.

Renewable Plastics

PE: Most plants didn’t resume operation as workers still didn’t come back. Operation will start
around Feb 14. In the near term players will stay on the sidelines. PP: Most plants didn’t resume
operation as workers still didn’t come back. Recent transactions were sparse. Production will
resume around the Lantern Festival. In the near term players will stay on the sidelines. PET:
Operating rates were low after the holiday. Most players were optimistic inertially. Supported by
positive external factors and tight supply of bottle chip, market players will be optimistic in the
near term, while market trend next month is unclear. EPS: Most plants didn’t start production
after the holiday. It may take some days to resume transaction. Market players were optimistic due
to tight supply and inertial growth after the holiday. In the near term the market will be
stable-to-high. PVC: Most plants didn’t start production and the market was quiet. Production will
resume around the Lantern Festival. In the short term, players intend to be on the sidelines. ABS:
Most plants didn’t resume production after the holiday. The market was mild. Most players stayed
on the sidelines. In the short term the market will adjust.
                      Table 14: Domestic Renewable Plastic Prices, RMB/mt
                                                                         Markup        Markup
  Product               Grade                  Feb 10       Jan 27
                                                                         (price)      (percent)
                A level PE pure EVA
    PE                                         8,500         8,500           0          0.00%
                      granules
              chemical fiber, white clear
   PET                                         8,800         8,600         200          2.33%
                         sheet

    PP           A level BOPP white            8,950         8,950           0          0.00%
                       granules

               EPS A level transparent
    EPS                                         7,800        7,650            150       1.96%
                      granules
                common A level white
   PVC                                          7,400        7,400             0        0.00%
              transparent soft granules
                Titanium ABS A level
   ABS                                          12,700      12,700             0        0.00%
                      granules

Rubber

Nature Rubber: NR
                                        Table 15: Domestic Rubber Prices, RMB/mt
futures rose sharply after
                                                                            Markup Markup
the holiday amid strong Product            Grade          Feb 10 Jan 27
                                                                             (price) (percent)
NR futures on TOCOM
                                            GBⅠ           42,700 40,100       2,600      6.48%
and international markets.      NR
                                         Future 1105 42,765 40,130            2,635      6.57%
In spot market, some
                               SBR           1502         25,500 24,500       1,000      4.08%
suppliers and buyers didn’t
                                BR          9000#         32,500 31,500       1,000      3.17%
come back, resulting in
                               SBS            792         22,200 21,700        500       2.30%
less quotations and light
trading. International NR growing area will stop rubber tapping, which firmed the optimistic
sentiment. But because of uncertainty of macro control, the market will fluctuate at a high level.
Synthetic Rubber: Producers raised quotations. But buying interest was mild in post-holiday
market. Players were optimistic amid soaring Shanghai rubber. The market will firm at a high
level with upward momentum. SBS: Producers increased offers. Players were optimistic due to
high Shanghai rubber market. Production did not totally resume. The market will be stable to high.

Aromatics

Benzene: Transactions were thin
                                               Table 16: Domestic Aromatics Prices, RMB/mt
while prices were high due to the
                                                                                Markup Markup
holiday. International market stayed        Product      Feb 10     Jan 27
                                                                                (price) (percent)
high. Next week the market will rise
                                           Benzene        8,000       7,900       100      1.27%
slightly. Toluene: After the holiday
                                            Toluene       7,700       7,600       100      1.32%
demand didn’t resume and quotations
                                            Xylene        7,750       7,650       100      1.31%
were sparse, resulting in light trading.
                                            Styrene      10,550      10,500       50       0.48%
Next week the market will adjust at a
high level. Xylene: Some traders and most downstream players didn’t come back to the market
after the holiday. Overall transactions were thin. Styrene: After the holiday, demand didn't resume
and quotations were sparse with fewer negotiations. Next week the market will stay high.

Intermediates and Chemical Fiber Raw Materials
                                  Table 17: Domestic Intermediate and Chemical Fiber Raw
                                                Materials Prices, RMB/mt
                                      Product            Feb10       Jan 27    Markup    Markup
PTA: The market hit a new                                                  (price)   (percent)
record amid favorable            PX(CFR Taiwan)         1,640    1,643        -3      -0.18%
market fundamentals and                PTA             11,700 11,100         600       5.41%
financial factors. Along               CPL             27,200 26,500         700       2.64%
with the increasing market             AN              20,300 19,500         800       4.10%
sentiment and downstream        Semi-dull PET Chip 13,500 13,150             350       2.66%
production, next week the
market will be stable to high. CPL: Prices went up boosted by tight supply and restocking after
the holiday. Next week the uptrend will continue. AN: The market rose with fluctuations amid
tight supply and high international market. players expected tight supply in February. So next
week the market will keep rising. PET Chip: The market was strong this week amid excess
liquidity and high feedstock market. But sales were not inspiring. Next week the market will
fluctuate up.

Phenols, Ketones and Downstream Products

Phenol: The market adjusted         Table 18: Domestic Phenols, Ketones and Downstream
slightly after the holiday with                    Products Prices, RMB/mt
light trading. Downstream                                                Markup     Markup
demand became warmer.              Product       Feb10       Jan 27
                                                                          (price)   (percent)
Next week the market will          Phenol        14,400      14,300          100     0.70%
fluctuate slightly. Acetone:       Acetone        8,000       7,800          200     2.56%
After the holiday domestic
                                     ECH         15,800      15,700          100     0.64%
quotations firmed supported
                                 Bisphenol A     19,650      19,450          200     1.03%
by international market.
                                 Epoxy Resin
Downstream demand was                            25,400      25,150          250     0.99%
                                    (E-51)
limited. Next week the
market will rise slightly. Bisphenol A: Both international and domestic markets rose after the
holiday. Downstream plants didn’t resume production totally. Next week the market will go up.
ECH: Some producers rose prices during the holiday. Downstream production needs to be
improved. Players were reluctant to buy at high price levels. Epoxy Resin: Most plants started
production. Market sentiment is improving. Next week the market will rise slightly.

Acids and Esters

 Glacial Acetic Acid:
                                 Table 19: Domestic Acids and Esters Prices, RMB/mt
The market was mild.
                                                                      Markup      Markup
Players stayed on the           Product          Feb10      Jan 27
                                                                       (price)   (percent)
sidelines and are waiting
                           Glacial Acetic Acid    2,800      2,800        0        0.00%
for further messages.
                              Ethyl Acetate       6,750      6,700       50        0.75%
Ethyl Acetate: Plants
                              Butyl Acetate      11,100     10,900       200       1.83%
improved       quotations,
                              Acrylic Acid       21,500     21,500        0        0.00%
while demand increased
                             Butyl Acrylate      21,600     21,600        0        0.00%
slowly. In the short term,
the market will inch up. Butyl Acetate: The market was stable. Market players were cautious.
Transactions were thin. In the short term, the market will rise slightly bolstered by high cost.
Acrylic Acid: The market was stable. Sales were not satisfying due to the holiday. Demand will
grow and prices may inch up. Butyl Acrylate: The market was stable. Demand in post-holiday
market will boost prices. The market will go up with fluctuations.

Chemical Fibers

Polyester Staple Fiber: The market kept rising supported by strong cotton and PTA markets. But
downstream market didn’t resumed, resulting in light trading. Next week the market will rise at a
moderate pace. Polyester Filament Yarn: After the holiday, the market kept rising driven by cost.
But since downstream plants didn’t resume operation, the market was short of upward momentum.
PA6 Chip: Feedstock market may continue to rise and PA6 will track the uptrend. Since
downstream plants didn’t resume operation, transactions were limited. Acrylic Staple Fiber:
Downstream plants closed gradually, resulting in weak demand. The market will rise after the
holiday. Spandex: After the holiday, prices rose. Some players still didn’t come back to the
market. Most players were on the sidelines. Next week the market will rise. Viscose Staple Fiber:
Producers were eager to pull up prices amid high cotton market. The market will keep rising later
on.
                     Table 20: Domestic Chemical Fibers Prices, RMB/mt
                                                                          Markup      Markup
                    Product                        Feb10       Jan 27
                                                                          (price)     (percent)
      Polyester Staple Fiber(1.4D*38mm)            14,600      14,200        400        2.82%

   Polyester Filament Yarn (POY150D/48F)           14,600      14,200        400        2.82%
       PA6 Chip(High Speed Spinning)               29,500      29,000        500        1.72%
       Acrylic Staple Fiber(1.5D*38mm)             24,100      23,900        200        0.84%
                 Spandex(40D)                      61,000      59,500       1,500       2.52%
          Viscose Staple Fiber(1.5D)               26,800      26,500        300        1.13%



Chemical Additives

Pathalic Anhydride: After
                                  Table 21: Domestic Chemical Additive Prices, RMB/mt
the holiday, downstream
                                                                            Markup Markup
DOP prices increased.              Product          Feb 10      Jan 27
                                                                            (price)      (percent)
Because of high cost,
                                   Pathalic
pahtalic anhydride followed                          9,800       9,600         200        2.08%
                                 Anhydride
DOP’s uptrend. Next week
                                    DOP             14,400      14,100         300        2.13%
the    market    will    be
                                 Zinc Oxide         17,500      17,200         300        1.74%
promising amid demand
                                Carbon Black         7,200       7,200           0        0.00%
recovery. DOP: The market
                                Viscose Staple
surged driven by 2-ethyl                             1,570       1,550          20        1.29%
                                 Fiber(1.5D)
hexanol. But transactions
were limited as demand didn’t resume. Next week transactions may improve. Carbon Black:
Feedstock market adjusted. Carbon black market fluctuated slightly with light trading. In the short
term the market will be stable. Zinc Oxide: Feedstock growth was limited by interest rate hike.
Most players stayed on the sidelines, resulting in light trading. In the near term the market will
adjust. Sulfur: The market became warm gradually after the holiday and prices rose slowly. Most
transactions were settled at RMB 1,450-1,600/mt.

Organic Alcohols

Methanol:          Market             Table 22: Domestic Organic Alcohol Prices, RMB/mt
sentiment didn’t recover                                                        Markup Markup
from the holiday. But                 Product             Feb10      Jan 27
                                                                                (price)    (percent)
players were optimistic.
                                     Methanol             2,950       2,865       85         2.97%
Quotations     at     ports
                                 Ethylene Glycol          9,850       9,500       350        3.68%
increased. The market
                                Diethylene Glycol        10,750      10,700       50         0.47%
will    likely go       up.
                                     n-Butanol           14,000      13,700       300        2.19%
Ethylene Glycol: PTA
                                 2-Ethyl Hexanol         15,550      15,100       450        2.98%
and downstream markets
picked up. Polyester market was promising. EG market will grow. Diethylene Glycol:
Transactions were thin after the holiday. Downstream plant didn’t resume normal operation. Next
week the market will adjust at a high level. N-Butanol: International market was high. Producers
pulled up prices. Market prices went up while demand was not satisfying. Players are cautiously
positive on market trend. 2-Ethyl Hexanol: Negotiation prices rose amid rising cost. But Demand
went up slowly, resulting in light trading. Players are cautiously positive on market trend.

Polyurethane Raw Materials

TDI: After the holiday,
                                    Table 23: Domestic Polyurethane Raw Materials Prices,
the market was mild.
                                                              RMB/mt
Downstream sector was
                                                                              Markup Markup
recovering. Next week                Product            Feb10      Jan 27
                                                                               (price)     (percent)
buying      interest    will
                                       TDI             20,800      20,800         0         0.00%
improve              slowly.
                                 Polymeric MDI         17,500      17,350        150        0.86%
Polymeric MDI: Cost
                                   Pure MDI            20,800      20,500        300        1.46%
rose at a moderate pace.
                                Propylene Oxide        14,700      14,700         0         0.00%
Peak        season       for
                                Polyether Glycol       15,500      15,400        100        0.65%
refrigerator is coming.
The market will keep               Adipic Acid         21,500      21,000        500        2.38%
climbing. Adipic Acid:              Butanone           13,800      13,500        300        2.22%
Shandong          Hongye’s            BDO              20,000      19,500        500        2.56%
turnarounds boosted the market, while demand resumed slowly. Next week the market will adjust
at a high level. Butanone: Demand didn’t resume after the holiday. Most players stayed on the
sideline. The market will rise slightly on tight supply. Propylene Oxide: Most producers ran at
high operating rates to meet orders after the holiday. As prices had risen sharply before the holiday,
the market will likely be stable. Pure MDI: Cost went up while demand was soft. Next week the
market will rise slowly. Polyether Polyol: The market was boosted by high PO cost. Next week
downstream plants will start operation gradually and market will accept high prices. BDO: Prices
rose on tight supply. Suppliers were reluctant to sell. Quotations were sparse. The market will go
up later on.

Coal Chemical Products

Crude Benzene: The market continued to rise. After the holiday downstream plants started
operation and purchased much. The market will keep rising later on. Coal Tar: The market went
up slightly. Coke plants run at limited rates. Downstream plants restated operation after the
holiday, resulting in demand increase. Coal tar market is likely to rise later on. Coal Tar Pitch:
The market was stable.
                               Table 24: Domestic Coal Chemical Products Prices, RMB/mt
Product was mainly
                                                                                Markup      Markup
provided to contract                Product            Jan 10       Jan 27
                                                                                (price)    (percent)
customers. Next week
                                Crude Benzene           6,000        5,900         100       1.69%
the market will adjust.
                                   Coal Tar             3,550        3,500         50        1.43%
Crude      Naphthalene:
                                Coal Tar Pitch          3,150        3,150          0        0.00%
The market adjusted.
                             Crude Naphthalene          8,400        8,300         100       1.20%
Suppliers intended to
                               Coking Benzene           7,400        7,300         100       1.37%
pull up prices. Next
week prices will rise         Maleic Anhydride         10,100        9,900         200       2.02%
sparsely. Coking Benzene: The market will rise on tight supply and high international market.
Maleic Anhydride: Feedstock cost firmed, while demand was weak. But inventory levels were
lower. The market will be stable with little rise.

Inorganic Acids

Sulfuric Acid: The market as a        Table 25: Domestic Inorganic Acids Prices, RMB/mt
whole was stable, with little rise
                                                                      Markup      Markup
in some regions. Transactions         Product      Feb10 Jan 27
                                                                       (price)    (percent)
were normal. Demand was
                                    Sulfuric Acid    560       540        20       3.70%
stable. Next week the market
                                     Nitric Acid    1,680     1,680        0       0.00%
will pick up slightly. Nitric Acid:
The market was stable. Feedstock liquid ammonia inched up. Demand was flat. Next week the
market will adjust.


                                       Metals Market

Non-ferrous Metals

                                       Table 26: Metal Prices
                                                                         Markup        Markup
   Product        Term          Unit         Feb 10        Jan 20
                                                                         (price)       (percent)
                 Futures      RMB/mt         75,880        71,700         4,180         5.83%
    Copper
                   Spot       RMB/mt         74,050        70,100         3,950         5.63%
  Aluminum       Futures      RMB/mt         17,185        16,785          400          2.38%
                   Spot       RMB/mt          16,750        16,560           190          1.15%
                 Futures      RMB/mt          19,585        18,255          1,330         7.29%
     Zinc
                   Spot       RMB/mt          18,750        17,750          1,000         5.63%
                 Futures       USD/oz          292.7        290.41          2.29          0.79%
     Gold
                   Spot        USD/oz          290.2         288.9           1.3          0.45%
    Thread       Futures      RMB/mt           5,188         4,930           258          5.23%
     Steel         Spot       RMB/mt           4,710         4,630           80           1.73%
                 Futures      RMB/mt           4,849         4,799           50           1.04%
  Wire Rod
                   Spot       RMB/mt           4,810         4,750           60           1.26%
     Lead          Spot       RMB/mt          17,150        17,000           150          0.88%
      Tin          Spot       RMB/mt         186,500        176,250        10,250         5.82%
    Nickel         Spot       RMB/mt         217,000        203,500        13,500         6.63%
During the Spring Festival holiday, international metal markets performed strong, with most
metals’ prices hitting record highs. LME copper price once stood above $10,000/mt. In the
business days after the holiday, both international and domestic metal markets fluctuated. About
the relevant policies, PBOC announced to raise benchmark interest rates by 0.25% on the evening
of February 8, indicating that government’s determination on tightening monetary policy and
regulating property market remains strong; supplies of most metals are ample while demand is
slow, which may be a threat to recent price hikes; USDX rebounded after decreasing nearly for a
month, and if it can stand at moving average level in the past 20 days, the uptrend in metal
markets will be depressed. In the near term the market will be promising with frequent
fluctuations. Players should be cautious.

Ferrous Metals

Post-holiday steel market went up with fluctuations as expected, mainly due to rising cost and
demand expectations. Most traders didn’t start business after the holiday, resulting in light trading.
Only some downstream players resumed operation. Demand didn’t increase markedly. At present,
inertial uptrend remained unchanged. Demand is a key factor to affect price trend. Rising cost may
prevent prices from falling. In the near future, cautious operation is recommended.

Copper

During the first week after the holiday, LME copper basically remained high although it has
slipped slightly from $10,000/mt mark. US economic data as a whole were optimistic while
market players worried PBOC’s interest rate hike would depress metal demand. In domestic
market, mainstream transaction prices were within the range of RMB 73,900-74,300/mt. Supply
was ample. After the holiday, market sentiment was mild and most players stayed on the sidelines,
resulting in light trading. Price spread between international markets and domestic markets
increased. Domestic markets won’t sink much even if LME copper price decreases. At present the
market is short of clear direction and LME copper price will still adjust around $10,000/mt mark.

Aluminum

During the Spring Festival holiday, LME aluminum futures price surged 1.6%, and then adjusted
at the high level due to large inventory increase, falling stock markets and interest rate hike in
China. After the holiday, Shanghai aluminum didn’t continue previous prosperity. Because
investors operated cautiously on the central bank’s interest rate hike, Shanghai aluminum futures
price kept adjusting slightly. Because most downstream plants didn’t start operation after the
holiday, resulting in soft demand, mainstream transaction prices went down to RMB
16,720-16,750/mt, although spot aluminum prices firmed. In the short term, aluminum prices are
not likely to rise markedly due to weak demand and Shanghai aluminum futures price will keep
adjusting slightly.

Zinc

Recently both international and domestic zinc futures continued to fluctuate widely. And this trend
won’t change in the short term because of dull season for zinc market and interest rate hikes. But
after influence of negative news ebbs, zinc prices are likely to rise along with the upcoming peak
season.

Construction Steel

After the holiday, most market players came back to construction market. In some regions prices
rose tentatively in hope of a good start. The market adjusted after the restart after the holiday and
downstream demand was limited, resulting in light trading. Some major steel makers improved
ex-work prices, which may help to pull up market prices in the future. Meanwhile, small and
medium-sized traders are facing less inventory and financial pressure than before and major
market players are optimistic. In the short run, domestic construction steel market will go up
inertially.


                                        Coal Market

                            Table 27: Domestic Coal Prices, RMB/mt
                                                                             Markup      Markup
                     Product                          Feb 10      Jan 27
                                                                             (price)     (percent)
         Shanxi high-quality mixed coal
                                                       780         780           0        0.00%
                 (5,500kcal/kg)
        Shanxi mixed coal (5,000kcal/kg)               680         680           0        0.00%
          Zaozhuang 1/3 Coking Coal                   1,450       1,450          0        0.00%
       Hebei Prime Coking Coal,Grade 10               1,563       1,563          0        0.00%
  Jincheng Washed Anthracite Middle Lump
                                                      1,050       1,050          0        0.00%
                   Coal
    Yongcheng Washed Anthracite Middle
                                                      1,680       1,680          0        0.00%
               Lump Coal
Steam Coal

After the holiday, steam coal market was mild. Demand was flat. Overall prices were stable with
little decrease in some mine mouth prices. This week coal prices at Qinhuangdao port remained
stable. After the holiday, along with the rising temperature, demand for thermal coal will slip and
coal market will enter a dull season, resulting in lower prices. However, at present the drought in
Northern China didn’t mitigate effectively. If the drought in the North continues, power supply
will tight, leading to more demand for thermal coal, which will boost coal prices in dull season.

Coking Coal

In the first week after the holiday coking coal market transactions went on smoothly. Downstream
demand was healthy. Coal prices basically firmed at a high level, with continuous rise in some
regions. Domestic coking coal prices surged supported by international market. The market was
active. After the holiday, along with the rising temperature, construction steel market will enter a
peak season, causing increase in demand for coking coal. Coking coal market will see a new round
of price hike.

Coal for Chemical Industry

Coal for chemical industry market remained stable this week. Quotations from major mining
enterprises and traders were steady. Most mining enterprises and traders didn’t start operation after
the holiday. Production will return to normal after the Lantern Festival. Some mines didn’t stop
production during the holiday, but they have no stocks as security inspection prior to the holiday
limited output. Overall supply was tight. Buying interest was weak because downstream chemical
plants didn’t resume production and they still purchased some feedstock before the holiday. The
market trend was unclear and players stayed on the sidelines. This week the market continued the
trend before the holiday and price adjustment may occur after the Lantern Festival. With the
beginning of spring ploughing, we expect demand for fertilizer will increase and coal for chemical
industry will stabilize at a high level.

								
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