rim petrochemicas report

RIM PETROCHEMICALS INTELLIGENCE DAILY

NO.2089 Mar 15 2016

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Rim INTELLIGENCE PETROCHEMICALS 3 F , Y a e s u D o r i H a t a B l d g , 1 - 9 - 8 H a t c h o b o r i , C h u o - k u , T o k y o , 1 0 4 - 0 0 3 2 J a p a n T E L : + 8 1 - 3 - 3 5 5 2 - 2 4 1 1 F A X : + 8 1 - 3 - 3 5 5 2 - 2 4 1 5 S I N G A P O R E T E L & F A X : 6 5 - 6 3 4 5 - 9 8 9 4

◎Notice

〇Report of the governance, processes and controls relating to the adherence to the

International Organization of Securities Commissions (IOSCO) principles for oil price

reporting agencies (PRAs) made available

Rim Intelligence is working to adhere to the IOSCO principles for PRAs. The report of the

governance, processes and controls relating to the adherence to the PRA principles for the

following price assessments has been uploaded to our website on Mar 3, 2016.

LPG, Petrochemicals, Power

URL: https://www.rim-intelligence.co.jp/contents/info/pramenu/

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◎Aromatics($/MT)

○-Physical and Forward prices

INDEX H2Mar H1Apr H2Apr H1May

○-Benzene

FOB Korea - 605/613 - ― 605/610 605/610 605/615

FOB E-Japan - 600/605 - 595/600 600/605 600/605 ―

FOB W-Japan - 605/610 - 600/605 605/610 605/610 ―

CFR Japan - 618/623 - 613/618 618/623 618/623 ―

○-Toluene

FOB Korea - 600/610 - ― 600/605 600/605 600/615

○-Iso MX

FOB Korea 630/640 ― 630/640 630/640 630/640

CFR Taiwan 650/660 ― 650/660 650/660 650/660

○-Styrene

FOB Korea - 1,085/1,095

-

― 1,090/1,100 1,090/1,100 1,080/1,090

CFR China - 1,110/1,118

-

― 1,115/1,120 1,115/1,120 1,105/1,115

○-PX

FOB Korea - 755/760 - 750/755 755/760 755/760 ―

CFR N.E.Asia - 775/780 - 770/775 775/780 775/780 ―

◎Olefins($/MT)

CFR N.E. ASIA CFR S.E. ASIA FOB Korea

Ethylene 1,160/1,180 1,120/1,140 1,150/1,170

Propylene 720/ 740 700/ 720 665/ 675

Butadiene + 1,100/1,130 + + 1,060/1,100 + 1,060/1,100

◎Polymers ($/MT)

CFR CHINA CFR S.E. ASIA

LDPE(Film) 1,120/1,150 1,120/1,170

LLDPE(Film) 1,090/1,130 1,120/1,170

HDPE(Film) 1,070/1,110 1,100/1,150

HDPE(Yarn) 1,080/1,120 1,110/1,160

PP(Homo) - BOPP 860/ 910 900/ 950

PP(Homo) - Yarn/INJ 850/ 900 880/ 930

https://www.rim-intelligence.co.jp/contents/info/pramenu/

mailto:[email protected]

3


PP(Block Co) - INJ 920/ 980 920/1,000

PVC(CMP) + 800/ 810 + ―

FOB N.E.Asia

PET(Bottle) 880/ 890

◎Intermediates($/MT)

CFR CHINA

Phenol (CFR NEA) 710/ 740

Bisphenol-A 880/ 920

Etylene Glycol - 660/ 670 -

Etylenedichloride 250/ 260

Vinylchloride monomer 585/ 595

Acrylonitrile 930/ 970

PTA - 590/ 595 -

Caprolactam 1,100/1,130

○China Domestic(Yuan/MT)

East China

Propylene 5,750/ 5,850

Propylene (Shandong)* 5,850/ 5,900

PP(Homo)-Yarn/INJ - 6,800/ 6,900 -

Butadiene + 8,900/ 9,000 +

SBR + 10,000/10,200 +

BR + 10,000/10,200 +

SM - 8,550/ 8,600 -

EPS 9,600/ 9,700

LDPE-Film - 9,300/ 9,600

LLDPE-Film 9,000/ 9,200 -

HDPE-Film - 8,900/ 9,200 -

HDPE-Yarn 9,100/ 9,400

MEG - 5,340/ 5,360 -

PTA - 4,430/ 4,470 -

*Shandong prices refer to ex-tank assessments in the Shandong area

Weekly & Monthly Average**

07. Mar - 11. Mar Feb Ave.

○-Benzene

FOB Korea 648/657 544/551

FOB E-Japan 643/651 537/545

FOB W-Japan 648/656 542/550

CFR Japan 661/669 555/563

○-Toluene

FOB Korea 633/640 548/557

○-Iso MX

FOB Korea 637/649 584/595

CFR Taiwan 657/669 604/615

○-Styrene

FOB Korea 1,103/1,115 957/971

CFR China 1,128/1,139 983/992

○-PX

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FOB Korea 771/777 714/720

CFR N.E.Asia 791/797 734/740

CFR N.E. ASIA CFR S.E. ASIA

07. Mar - 11. Mar Feb Ave. 07. Mar - 11. Mar Feb Ave.

Ethylene 1,134/1,162 914/936 1,094/1,114 916/942

Propylene 696/ 716 623/634 690/ 714 680/692

Butadiene 1,050/1,070 821/845 1,012/1,038 808/832

FOB Korea

Ethylene 1,114/1,134 887/909

Propylene 656/ 668 589/601

Butadiene 1,012/1,038 808/832

CFR CHINA CFR S.E. ASIA

LDPE(Film) 1,112/1,142 1,083/1,113 1,112/1,146 1,083/1,122

LLDPE(Film) 1,074/1,114 1,052/1,084 1,096/1,130 1,058/1,095

HDPE(Film) 1,070/1,110 1,052/1,092 1,092/1,126 1,065/1,102

HDPE(Yarn) 1,080/1,120 1,062/1,102 1,102/1,136 1,074/1,112

PP(Homo) - BOPP 850/ 870 826/ 852 900/ 920 851/ 878

PP(Homo) - Yarn/INJ 840/ 860 816/ 834 880/ 900 840/ 858

PP(Block Co) - INJ 910/ 940 886/ 914 920/ 970 907/ 934

PVC(CMP) 760/ 770 733/ 743 ― ―

PET(Bottle FOB NEA) 816/ 826 788/ 800 ― ―

07. Mar - 11. Mar Feb Ave.

Phenol 710/ 740 710/ 740

BisPhenol-A 880/ 920 880/ 920

Etylene Glycol 711/ 723 623/ 629

Etylenedichloride 250/ 260 240/ 250

Vinylchloride monomer 585/ 595 577/ 587

Acrylonitrile 930/ 970 930/ 970

PTA 595/ 604 553/ 562

Caprolactam 1,100/1,130 1,150/1,184

East China 07. Mar - 11. Mar Feb Ave.

Propylene 5,730/5,830 4,745/4,870

Propylene (Shandong)* 5,820/5,930 4,963/5,065

PP(Homo)-Yarn/INJ 7,000/7,100 6,295/6,395

Butadiene 8,100/8,300 6,423/6,543

SBR 9,400/9,600 8,620/9,060

BR 9,220/9,420 8,090/8,560

SM 8,770/8,850 7,653/7,704

EPS 9,600/9,700 8,353/8,453

LDPE-Film 9,500/9,600 9,385/9,485

LLDPE-Film 9,000/9,300 8,748/8,913

HDPE-Film 9,000/9,300 8,530/8,930

HDPE-Yarn 9,100/9,400 8,965/9,065

MEG 5,666/5,718 4,913/4,951

PTA 4,540/4,568 4,243/4,270

*Shandong prices refer to ex-tank assessments in the Shandong area

○Contract Prices**

Jan Feb Mar

Bz ACP(CFR NEA,$/mt) 570 560 570

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Yen/mt conversion 74,100 70,600 69,000

Bz USCP(FOB USGC,cts/gal) 218 185 177

$/mt conversion 652 552 529

PX ACP (CFR NEA,$mt) 710 725

Bz ACP is released by JX. Bz USCP and PX ACP are agreed prices between makers and end-users.

○Feedstocks**

Index

Naphtha CFR Japan($/mt) - 353.75 / 355.75 -

Yen/mt conversion 28,082 -

Naphtha CFR Japan prices are from Products reports

Jul-Sep 15 Oct-Dec 15 Jan-Mar 16 (Implied)

Naphtha Domestic CP(Yen/kl) 47,200 40,900 33,400

Calculated from statistics from Ministry of Finance of Japan.

Forecasts calculated based on Naphtha CFR Japan prices.

H1Apr H2Apr H1May

Butane(CFR Japan,$/mt) - 352 / 357 - - 348 / 353 - - 348 / 353 -

Butane prices are from LPG report

○Reference Prices($/MT)**

Apr May Jun

Japan Mogas-Tocom(Yen/kl) 36,450 - 38,920 - 39,930 -

Yen/mt conversion 50,625 - 54,056 - 55,458 -

Japan Mogas-Tocom prices are settlement prices for each month from TOCOM

East West

Japan Mogas-RIM(Yen/kl) - 33,900 / 34,900 + 35,000 / 35,200 -

Yen/mt conversion 47,778 + 48,750 -

Japan Mogas-RIM prices are from Japan Products report

WTI(Apr) Brent(May) Paper Dubai(Mar)

Tokyo Spot Crude($/bbl)/ Mar15 16:00 36.78 - 39.09 - 34.52 -

$/mt conversion 280 - 296 - 250 -

Tokyo Spot Crude WTI, Brent and Paper Dubai prices are from Crude/Condensate report

Nymex WTI(Apr) ICE Brent(May)

Crude Futures settlement($/bbl)/ Mar14 37.18 - 39.53 -

$/mt conversion 283 - 299 -

Crude Futures settlement prices are settlement prices from Nymex and ICE.

TTM Interbank

Forex($/Yen) 113.90 + 113.16 -

○Spread/aromatics($/MT)**

BZ TL MX SM PX Nap

Benzene ― 4 + -26 - -481 - -149 - 254 -

Touluene -4 - ― -30 - -485 - -153 - 250 -

ISO MX 26 + 30 + ― -455 + -123 + 280 +

SM 481 + 485 + 455 - ― 333 + 735 +

P-Xylene 149 + 153 + 123 - -333 - ― 403 +

Naphtha -254 + -250 + -280 - -735 - -403 - ―

Calculated from the price difference between each product and CFR Japan Naphtha

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○Spread/olefins($/MT)**

Ethylene Propylene Butadiene Naphtha

Ethylene ― 440 55 - 815 +

Propylene -440 ― -385 - 375 +

Butadiene -55 + 385 + ― 760 +

Naphtha -815 - -375 - -760 - ―

Calculated from the price difference between each product and CFR Japan Naphtha

○Spread/Polyolefin & Intermediate VS Feedstocks ($/MT)**

LDPE(Film) -58 PP/Homo(BOPP) 155 SM 252 + EDC -84

LLDPE(Film) -2 PP/Homo(Yarn/INJ) 145 Phenol -204 + VCM 177

HDPE(Film) -127 PP/Block Co(INJ) 184 PTA 72 + PVC 209 +

MEG -37 -

Calculated from the price difference between each product and its feedstock.

○Spread/Aromatics vs Naphtha & WTI & Gasoline**

Naphtha CFR JPN Nymex WTI JPN Mogas-tocom JPAN Mogas-RIM

BZ FOB Korea ($/MT) 254 - 325 - 164 - 185 -

Yen/mt 28,931 - 37,055 - 18,712 - 21,073 -

TL FOB Korea ($/MT) 250 - 322 - 161 - 181 -

Yen/mt 28,503 - 36,628 - 18,285 - 20,646 -

MX FOB Korea ($/MT) 280 + 352 + 191 + 211

Yen/mt 31,920 + 40,045 + 21,702 + 24,063 +

Calculated from the price difference between each product and CFR Japan Naphtha, Nymex WTI, Mogas-tocom and Japan Mogas-RIM

**These are reference prices and not price assessments.

Transactions

Benzene PX

May FOB KOREA 610 Apr CFR NEA 780

Aromatics

Benzene prices on an FOB Korea basis on Tuesday for April and May loading fell $20/mt

from the previous day to $605-610/mt and $605-615/mt, respectively. Steep losses in US

benzene prices on Monday sent the market lower. On an FOB Korea basis, a deal for May

loading was concluded at $610/mt. In addition, buyers bid for May loading at $605/mt

while sellers offered at $615/mt. For June loading, discussions were heard at $610-615/mt.

On a CFR China basis, bids for May delivery were reported at $615/mt with counter-offers

heard at $625/mt.

China domestic benzene prices were unchanged at Yuan 4,850-4,950/mt, equivalent to

an import price of $624/mt.

Toluene prices on an FOB Korea basis for April and May loading dropped $25/mt to

$600-605/mt and $600-615/mt, respectively. With China domestic prices falling to the

high Yuan 4,700’s/mt, the FOB Korea market also came under downward pressure. For May

loading, a deal was done based on market quotations. Thereafter, bids for May loading

were posted at $600/mt while offers were reported at $615/mt. For June loading, buyers

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bid at $610/mt while sellers offered at $630/mt. For April loading, sources reckoned

that discussions levels were in the range of $600-605/mt.

Prices for styrene monomer (SM) on an FOB Korea basis for April were in the range

of $1,090-1,100/mt, unchanged from the previous day while prices for May were in the

range of $1,080-1,090/mt, down $5. On a CFR China basis, prices for April were in the

range of $1,115-1,120/mt, down $3 from the previous day while for May, prices were in

the range of $1,105-1,115/mt, down $5. In the China domestic market, prices were in the

range of Yuan 8,550-8,600/mt, down Yuan 150 from the previous day. Prices for May on

an FOB Korea basis were led lower by declines in the CFR China market. For the CFR China

market, amid a lack of market players and a low number of bids and offers heard, prices

in the CFR China market were exposed to downward pressure from declines in the China

domestic market.

On a CFR China basis, offers on cargoes arriving in April at $1,120/mt met with bids

at $1,115/mt while for May cargoes, offers at $1,115/mt met with bids at $1,105/mt. For

both timings, no deals were reported done. In the market on Monday, a cargo arriving

in April was confirmed to have been traded at $1,120/mt.

In the China domestic market, bearish sentiment from declines in crude oil prices

and a drop in buying by derivative makers weighed on prices. Amid this situation, spot

cargoes traded hands at lower levels in the range of Yuan 8,550-8,600/mt.

Isomer grade mixed xylene (MX) prices for April and May were unchanged at $630-640/mt

on an FOB Korea basis and at $650-660/mt on a CFR Taiwan basis. Benchmark feedstock

naphtha prices and derivative paraxylene (PX) prices softened, but activity in the MX

market was subdued. Sources reckoned that on an FOB Korea basis talks on April and May

loading were in the range of $630-640/mt. A time swap whereby a cargo was released for

second-half April loading and a similar cargo taken in for May loading was offered at

a spread of $1/mt (backwardation). No counter-bids were heard.

Paraxylene (PX) prices for second-half March declined $10/mt to $770-775/mt on a CFR

Northeast Asia basis and to $750-755/mt on an FOB Korea basis. For April, prices weakened

$10/mt to $775-780/mt on a CFR Northeast Asia basis and to $755-760/mt on an FOB Korea

basis. The market was dragged down by losses in benchmark feedstock naphtha prices. On

a CFR Northeast Asia basis for April delivery, a deal was done at $780/mt. Thereafter,

offers for April delivery were reported at $780/mt. For May delivery, offers at $782/mt

failed to elicit any bids. Some sources reckoned several deals might have been done in

the low $780’s/mt but confirmation could not be obtained.

Olefins

Ethylene markets in Asia held steady on Tuesday with CFR Northeast Asia and CFR

Southeast prices showing no change at $1,160-1,180/mt and $1,120-1,140/mt, respectively.

FOB Korea prices were stable at $1,150-1,170/mt.

In Northeast Asia, spot cargoes from outside the region emerged in the market. A cargo

of Middle Eastern origin for mid-April or second-half April delivery and a cargo

originating from Mexico for end-April or early May delivery seemed to be available.

Although firm offers were not reported, sellers seemed to be targeting spot sales in

the high $1,100’s/mt to $1,200/mt. As for demand, some buyers apparently contemplated

8


procuring spot cargoes. Buying ideas were heard at $1,150/mt. Furthermore, some sources

reckoned that buyers might enter discussions in the high $1,100’s/mt. On the other hand,

two end-users were not keen to buy spot cargoes for April delivery. One of them had already

secured adequate quantities to meet requirements. The other had high inventories and

felt that demand in April could be satisfied with term cargoes alone.

In the FOB Northeast Asia market, the sell tender by Formosa Petrochemical Corp (FPCC)

in Taiwan that closed Tuesday was awarded at $1,205/mt. Offered in the tender was one

cargo loading April.

In Southeast Asia, with material from outside the region such as the Middle East seen

in the market, perceptions of supply tightness were showing signs of easing. Sources

reckoned that sellers might be willing to discuss if buyers were prepared to pay in the

low $1,100’s/mt. On the other hand, one buyer with room for spot purchases for second-half

April delivery considered buying at around $1,100/mt. As cargoes from the Middle East

were more likely to move to Southeast Asia instead of Northeast Asia, some players felt

that after taking into account the freight differential between Middle East-Northeast

Asia and Middle East-Southeast Asia, the CFR Southeast Asia market was about $40/mt lower

than the CFR Northeast Asia market.

As for material from outside the region, a cargo of about 4,000mt loading from Mexico

in the second half of March was reportedly traded although details such as price were

sketchy. Some sources perceived that the cargo might be moving to Europe. In addition,

as was reportedly previously, a 9,000mt cargo loading form Saudi Arabia in the second

half of March was said to be available. The cargo was offered by Petro Rabigh in a sell

tender that closed Monday, Mar 14. Including this cargo, Petro Rabigh was selling a total

of 15,000mt loading March in the spot market. Sources reckoned that this could be largely

attributed to troubles that had occurred at the company’s polyethylene facilities in

early March.

With regard to facilities, a naphtha cracker (ethylene capacity 1.00-mil mt/year)

owned by Fujian Refining & Petrochemical Co in China was shut down on Monday, Mar 14,

due to glitches. The cracker was expected to be shut down for three to five days. As

polyethylene units were shut down at the same time, the impact on ethylene supply seemed

to be limited.

In propylene markets in Asia, prices on a CFR Northeast Asia basis were in the range

of $720-740/mt, unchanged from the previous day. On a CFR Southeast Asia basis, prices

were in the range of $700-720/mt and on an FOB Korea basis in the range of $665-675/mt,

both markets also unchanged from the previous day.

In the CFR Northeast Asia propylene spot market on Tuesday, amid a sense of a lack

of clarity on market direction moving forward, a wait-and-see mood held in the market

with neither buyers nor sellers seen as rushed to conduct deals. With regard to supply

moving forward, one market source said there were opinions expressed that supply hinged

on the operating status of a new propane dehydrogenation unit (PDH) at SK Gas in South

Korea. With regard to that unit, one market source in South Korea said that the unit

was producing material within specification and that at present run rates were being

increased. The source added that there were reports that the new PDH unit would soon

supply propylene via pipeline to derivative makers within the same industrial complex.

In China, prices in the East China and Shandong market were unchanged on the day.

In East China, a PDH unit at Oriental Energy was said to be running at a lower rate due

9


to troubles. The unit was heard to be scheduled for a turnaround in April. Meanwhile,

with regard to a methanol-to-olefin unit at Xingxing Energy that is currently shut down

due to troubles, there were reports that the unit would be restarted soon although a

specific date for that to take place could not be confirmed.

In the Southeast Asia market, a producer in the Middle East appeared to have room

to sell propylene cargoes in April due to troubles at a downstream butanol unit. On the

other hand, with some buyers focused on how events shape up with the PDH unit at SK Gas

and a deep catalytic cracker (DCC) at IRPC in Thailand, said buyers were in no rush to

engage in talks. A buyer at one company was seen as being able to meet April demand with

volumes in stock and held no interest in buying spot cargoes.

In butadiene markets in Asia, prices on a CFR Northeast Asia basis were in the range

of $1,100-1,130/mt, up $15 from the previous day while on a CFR Southeast Asia and FOB

Korea basis prices moved up $5 to the range of $1,060-1,100/mt. For all markets, prices

moved higher on a sense of a shortage in supply.

In the CFR Northeast Asia spot market on Tuesday, firms talks were not heard taking

place due to a lack of availability with the sense towards the shortage in supply still

said to be strong. According to a trader at one company in China, even though buying

ideas were indicated at the $1,100/mt level, with no availability sellers were seen

holding talks in the market. And even though the trader said that buyers at the $1,150/mt

level were not seen, for some consumers that continued to face a shortage in supply,

raising buying ideas even further may be the only course of action to take. But at present,

sellers were heard to not be holding any availability. In the event talks were to take

place, with a deal recently taking place on an FOB Korea basis at $1,080/mt, there were

views that deals would not take place unless prices were at or above $1,130/mt.

In China, the butadiene market was is the range of Yuan 8,900-9,000/mt, up Yuan 350

from the previous day. As was reported in the ethylene section above, due to a naphtha

cracker shut down at Fujian Refining & Petrochemical Co, a butadiene unit was also shut

down Mar 14, a shutdown that is expected to last five to seven days. As a result, the

sense tied to a supply shortage in domestic material strengthened. And with recent

increases for prices in the import market, butadiene prices in the domestic market

increased. The synthetic rubber market also moved higher on the back of a higher butadiene

market with prices for styrene butadiene rubber (SBR) and butadiene rubber (BR) both

moving up to the range of Yuan 10,000-10,200/mt, up Yuan 200 and Yuan 300, respectively.

In Southeast Asia, one butadiene maker said that there were inquiries from consumers,

but not as strong as before. Recent increases in the butadiene market and a worsening

of margins for synthetic rubber makers was cited as the likely reason for weaker buying

interest.

Meanwhile, in Raffinate-1 trade, a sell tender closed Mar 11 by IRPC in Thailand on

2,000mt loading Apr 30-May 5 was reportedly awarded at a price linked to spot naphtha

quotations on a CFR Japan basis.

Polymers

In the CFR China polyolefins market on Tuesday, sellers were hesitant to enter

discussions owing to a scarcity of supply and firmness in feedstock olefin prices. Under

this situation, firm offers were not heard. For polyethylene (PE), only selling ideas

for low density polyethylene (LDPE) Film of South American origin were reported at

10


$1,120/mt. As the origin of the cargo was located far away, the level was deemed to be

relatively low. Sources reckoned that, should LDPE Film of originating from Asia be

available, discussions could take place at $1,200/mt and above. For polypropylene (PP)

Homo Yarn/Injection (Inj), availability was limited. Traders reckoned that one producer

in India might not be indicating offers for the time being. In view of strong domestic

demand in India, the producer might not have cargoes for export.

The China domestic market softened owing to high inventories. Talks were reported

at Yuan 9,300-9,600/mt for LDPE Film, Yuan 9,000-9,200/mt for linear low density

polyethylene (LLDPE) Film, Yuan 8,900-9,200/mt for high density polyethylene (HDPE) Film

and Yuan 6,800-6,900/mt for PP Homo Yarn/Inj.

On delivery to Indonesia, one producer in Thailand revised list prices on Tuesday

to $1,210/mt for HDPE Film, $1,060/mt for PP Homo Yarn/Inj, $1,080/mt for PP Film and

$1,120/mt for PP Block Co. Compared to Mar 7, prices up $20/mt for HDPE Film and up $40/mt

for all the PP grades.

Polyvinyl chloride (PVC) prices on a CFR China main port basis on Tuesday were in

the range of $800-810/mt, up $40 from the previous day on the back of recent increases

for ethylene, seen as a benchmark for feedstock costs. Further upward pressure for PVC

prices also came with a producer in Taiwan indicating prices for April, prices that are

viewed as a benchmark by market players. For April, the producer indicated an offer price

of $800/mt on a CFR China basis, up $40 from March and at $860/mt on a CFR India basis,

up $50. Following the announcement of April offers by the producer, market sources said

that consumer buying interest was firming up.

Intermediates

Purified terephthalic acid (PTA) prices on a CFR China basis were in the range of

$590-595/mt, down $5 from the previous day while in the China domestic market prices

were in the range of Yuan 4,430-4,470/mt, down Yuan 60. CFR China prices followed declines

in the China domestic market where prices were dragged by losses in PTA futures on the

Zhengzhou Commodity Exchange

In the CFR China market, amid a lack of bid/offer activity on Tuesday, prices were

led lower with declines for prices in the China domestic market. In the China domestic

market, trades on spot cargoes were reportedly done either side of Yuan 4,450/mt. In

addition, deals on a delivered basis took place at Yuan 4,470/mt.

Ethylene glycol (EG) prices on a CFR China basis were in the range of $660-670/mt, down

$25 from the previous day while in the China domestic market prices were in the range

of Yuan 5,340-5,360/mt, down Yuan 100. Amid a lack of clarity on the market moving forward

traders were seen as rushed to sell off inventories, moves that applied downward pressure

on prices in the CFR China and China domestic market.

In the CFR China market, deals were seen taking place on cargoes arriving in the second

half of March at prices as low as $660/mt although in the early hours of trade, deals

were done at prices in the range of $670-675/mt. For cargoes arriving in April, deals

were heard to have taken place at $675/mt while tax-free cargoes traded hands in the

range of $673-675/mt. In the China domestic market, spot cargoes were traded in the

afternoon hours in the range of Yuan 5,360-5,380/mt but by the early evening hours deals

fell back to either side of Yuan 5,350/mt.

11


Naphtha

Open-spec naphtha prices in Asia were in the range of $353.75-355.75/mt, down

$11.25/mt from a day before whit a fall in Brent crude oil prices.

In Brent crude oil futures trade on the Intercontinental Exchange (ICE) early in the

evening in Asia, the May contract went down $1.35/bbl to $38.71/bbl. Open-spec naphtha

prices for H2 Apr arrival were at $350.75-351.25/mt, H1 May arrival at $353.75-354.25/mt

and H2 May arrival at $355.25-355.75/mt.

On the timing spread, the H2 Apr/H2 May spread was in contango of of $4.50/mt,

narrowing 50cts/mt. The May Brent/H1 May naphtha spread was at $64/mt in favor of naphtha,

narrowing $1/mt from the previous day.

LPG

The CFR Far East market inched down on Tuesday, dragged down by losses in crude prices.

CFR Japan propane and butane prices for first-half April delivery were down $2/mt

from the previous day to $321-326/mt and $352-357/mt respectively. Relative to the April

CP, the premium for propane and butane was revised down by $1/mt to $31-36/mt and

$37-42/mt respectively. CFR Japan propane and butane prices for second-half April

delivery softened $2/mt to $317-322/mt and $348-353/mt respectively. Relative to the

April CP, the premium for propane and butane was revised down by $1/mt to $27-32/mt and

$33-38/mt respectively.

US Summary

NYMEX WTI crude futures fell on Monday amid increased selling pressure generated by

the unlikelihood of a coordinated output freeze by oil producers coupled with high crude

inventories in the US. The front-month contract ended Monday at $37.18/bbl, down $1.32

from last Friday. Iran’s oil minister was quoted in international news report as stating

that Iran would not agree to cap oil production until output reached 4.00-mil barrels

per day. Russia’s energy minister suggested oil producers would gather as late as April

in Doha, Qatar, to discuss an output freeze, shrugging off earlier expectations that

the meeting would be held on Mar 20 in Moscow. With regards to rising US crude oil

inventories, market intelligence company Genscape said inventories at Cushing in the

US state of Oklahoma, a delivery point of US crude oil futures, appeared to be closing

in on storage capacity limits. Meanwhile, North Sea Brent crude on the ICE also turned

lower with the front-month May contract shedding 86cts to end the day at $39.53/bbl.

The April natural gas contract on the New York Mercantile Exchange (NYMEX) closed

at $1.819 per million British thermal units (mmBtu) on Monday, down 0.3cts from the

previous with day amid subtle selling spurred by higher-than-normal temperatures.

The April WTI contract was at $36.40/bbl as of 17:15 Tokyo time on Tuesday, down 78cts

from the closing price in New York the previous day.

In the USGC benzene market on a DDP (Delivered Duty Paid) basis on Monday, bids on

cargoes arriving in March at 192cts/gal were countered with offers at 202cts while for

April arrivals bids at 200cts met with offers at 208cts. Bid/offer spreads for May and

June were in respective ranges of 206-212cts and 210-215cts.

In Europe on a CIF ARA (Amsterdam, Rotterdam, Antwerp) basis on the same day, bids

on March arrivals at $645/mt brought out offers at $655/mt.

Market News

○ 2016 Turnaround Season: SADAF, PTT, Kayan lead the way

12


The 2016 turnaround season for naphtha crackers, ethane crackers and ethylene units

is underway with an estimated 3.50-mil mt/year of capacity already offline. More units

representing another 4.00-mil mt/year or more of capacity are also scheduled for

shutdowns to take place deep into May. Spot ethylene prices in Asia have been climbing

higher on the back of tight supply created, in part, by planned maintenance activities

(see table below) along with shutdowns and lower operating rates for other units due

to troubles.

Naphtha Cracker, Ethane Cracker, Ethylene Unit

Asia & Middle East: 2016 Turnaround Schedule Country Company Date Unit Capacity

Saudi Arabia SADAF early Feb-mid Mar Ethane Cracker 1.10-mil

Thailand PTT H2 Feb-end Mar Ethane Cracker 1.00-mil

Saudi Arabia Kayan Mar 1 (45-days) Ethylene Unit 1.48-mil

Japan Tosoh Mar 8-Apr 14 Naphtha Cracker 527,000

South Korea Yeochun NCC Mar 10-Apr 9 Naphtha Cracker 580,000

China Maoming PC Mar-Apr Naphtha Cracker 360,000

China Wuhan PC April Naphtha Cracker NA

South Korea Lotte Chemicals Apr 11-May 5 Naphtha Cracker 1.00-mil

Japan Mitsubishi Chem May-Jun Naphtha Cracker 540,000

Thailand PTT May or June Ethylene Unit 400,000

Japan Maruzen May (60 days) Naphtha Cracker 525,000

Capacity: ethylene mt/year

◇

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