VIEWS: 4 PAGES: 15 POSTED ON: 7/20/2011
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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