Petrochemicals

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Petrochemical price monitor

- Better spread for naphtha-based producers

naphtha widened another 2.3-2.9% WoW on weaker naphtha price (-4.9% WoW)

brought by declining oil price. This also depressed petrochemical product prices but

less so. Non-integrated producers enjoyed a wider product spread of ~2-5% WoW,

especially for PP, since propylene price continued to fall to a 52-week low. Demand

for PE resin remained sluggish due to both low season and buyer expectations of

lower prices and thus reluctance to build inventory.

- Aromatics prices continued to head south. Prices of PX and BZ slid to a 52-

week low of US$1,005/t (-3.6% WoW) and US$1,043/t (-4.1% WoW). Sluggish

demand for PX and BZ during the low season for production of downstream

products continued to depress prices before stock building begins early next year.

- Lower feedstock sent PET/PTA spread up. All PET/polyester chain product

prices - from upstream to downstream - continued to decline on seasonal impact.

At the same time, integrated PET/PTA spread edged up 1.8% WoW to US$292/t,

owing to lower PX and MEG prices. PTA price fell the steepest, by 5.6% WoW, on

ample supply but slow demand. This was the result of more PTA supply in the

market since several plants in China resumed normal operations in Nov 2014 after

months of maintenance shutdown and reduction in operating rates.

Investment view: The petrochemical sector index slid 0.5% WoW, slightly

outperforming the market (-0.7% WoW). Key driver was PTTGC, whose share price rose

1.6% WoW on better than expected 3Q14 profit despite a huge inventory loss. This

positive sentiment was overshadowed by IVL’s disappointing results, which sent the

share price down 5.5% WoW. We expect to see the index soften in the near term on

lack of enthusiasm during the sector’s low season.